Choose the One Alternative That Best Completes the Statement or Answers

question 18

Multiple Choice

Choose the one alternative that best completes the statement or answers the question.
-Money magazine reports that the percentage of trading days in which the Dasdaq loses or gains $2 \%$ or more has been increasing since 1995 indicating more volatility in the Dasdaq. Use a graphing utility to fit an exponential function to the data. Predict the percentage of trading days in 2001 having such swings in value.
$\begin{array}{l|l}\text { Year } & \% \text { of trading days } \\\hline 1995,0 & 2 \\1996,1 & 5 \\1997,2 & 8 \\1998,3 & 18 \\1999,4 & 23 \\2000,5 & 49\end{array}$

• A) \(y = 2.353 \mathrm { e } ^ { 0.610 x , 91 \text { days } }\)
• B) \(\mathrm { y } = 1.669 \mathrm { x } ^ { 1.706,46 \text { days } }\)
• C) \(\mathrm { y } = 1.278 \mathrm { e } ^ { 0.611 \mathrm { x } , 92 \mathrm { days } }\)
• D) \(\mathrm { y } = 1.849 \mathrm { e } ^ { 0.531 \mathrm { x } , 76 \mathrm { days } }\)

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Definitions:

Financial Risk

The potential for monetary loss in investing or engaging in a business enterprise.

Capital Asset Pricing Model

A model that describes the relationship between systematic risk and expected return for assets, particularly stocks.

M&M Proposition I

Modigliani and Miller Proposition I states that in a world without taxes, bankruptcy costs, and asymmetric information, a firm's value is unaffected by how it is financed, whether by debt or equity.

Law Of One Price

An economic theory that states that in efficient markets, identical goods must have only one price.