A Stock Price Has a Historical Volatility of 24

question 3

Multiple Choice

A stock price has a historical volatility of 24%.If an anomalous event occurs to the company in the next past two days,which was not anticipated,what is the most likely implied estimate of the unconditional volatility using the GARCH model?

• A) 12%
• B) 20%
• C) 27%
• D) 45%

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Definitions:

Build Value

The process of increasing the worth of a product, service, or brand, typically through enhancements in quality, functionality, or perception.

Product

An item or service created through a process to satisfy consumer needs or desires.

Price

The amount of money required to purchase goods or services, serving as a reflection of value, costs, and market demand.

Dual Distribution

Dual distribution refers to a marketing strategy where a firm reaches its customers through two or more different types of distribution channels.