Excessive Volatility Refers to the Fact That

question 85

Multiple Choice

Excessive volatility refers to the fact that

• A)stock returns display mean reversion.
• B)stock prices can be slow to react to new information.
• C)stock price tend to rise in the month of January.
• D)stock prices fluctuate more than is justified by dividend fluctuations.

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Definitions:

Hunting Stand

A structure used by hunters to elevate themselves above the ground to improve visibility and shooting range on their prey.

Diversification

Practice of reducing risk by allocating resources to a variety of activities whose outcomes are not closely related.

Risk-Free Asset

An investment that is expected to return its original value without any loss and with a certain rate of interest.

Positively Correlated

A relationship between two variables where both variables move in the same direction, meaning that as one variable increases, the other also increases, and vice versa.