If E Is the Base of Natural Logarithms, and (σ)

question 57

Multiple Choice

If e is the base of natural logarithms, and (σ) is the standard deviation of the continuously compounded annual returns on the asset, and h is the interval as a fraction of a year, then the quantity (1 + upside change) is equal to:

• A) e^[(σ) * SQRT(h)]
• B) e^[h * SQRT(σ)]
• C) (σ) * e^[SQRT(h)]
• D) none of the above.

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Definitions:

Corporation

A legal entity separate from its shareholders, with its own rights, privileges, and liabilities.

Business Entity

An organization established as a separate legal entity for business purposes, which may include corporations, partnerships, and sole proprietorships.

Accounting Purposes

The reason or rationale for recording financial transactions and maintaining financial records, mostly to provide insight into a business’s financial health, comply with legal obligations, and inform decision-making.

Proprietorship

A business entity owned and operated by a single individual, with no legal distinction between the owner and the business.