A Stock Provides an Expected Return of 10% Per Year

question 20

Multiple Choice

A stock provides an expected return of 10% per year and has a volatility of 20% per year. What is the continuously compounded expected return in one year?

• A) 6%
• B) 8%
• C) 10%
• D) 12%

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Definitions:

Postage Due

The fee charged for delivering mail for which sufficient postage has not been prepaid by the sender.

Replenish

The act of refilling or restoring to its original level, often used in reference to inventory or petty cash funds.

Petty Cash Fund

A small amount of cash kept on hand for minor or incidental expenses.

Credit To Cash

An accounting entry that increases the cash balance in a company's books.