If the Stock Price Follows a Random Walk Successive Price

question 17

Multiple Choice

If the stock price follows a random walk successive price changes are statistically independent. If σ2 is the variance of daily price change, and there are t days until expiration, the variance of the cumulative price changes is:

• A) σ2
• B) (σ2) * (t)
• C) (σ2)/t
• D) none of the above

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Definitions:

Revenue

The total amount of money generated by the sale of goods or services related to a company's primary operations.

Expenses

Costs incurred during a business's operational activities.

Departments

Departments refer to distinct functional areas within an organization, each focusing on a specific area of operation like sales, human resources, or finance.

Revenue Center

A segment or area of a business responsible for generating revenue, focusing on sales and outward-facing operations rather than cost control.