If the Volatility of a Stock Is 20% Per Annum

question 1

Multiple Choice

If the volatility of a stock is 20% per annum and a risk-free rate is 5% per annum, which of the following is closest to the Cox, Ross, Rubinstein parameter u for a tree with a three-month time step?

• A) 1.05
• B) 1.07
• C) 1.09
• D) 1.11

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Definitions:

Pregnant

A state of carrying a developing fetus within the female body.

Nursing

The field and practice of providing care and assistance to patients for the promotion, maintenance, and restoration of health.

Amplitude

The magnitude or strength of a variable attribute, such as a wave.

Frequency

Refers to the rate at which a repeating event occurs, such as the number of occurrences of a particular event within a set period of time.