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:

Binomial Random Variable

A type of discrete random variable that counts how often a particular event occurs in a fixed number of tries or trials.

Normal Approximation

A statistical method where a binomial distribution is approximated using the normal distribution, usually applied when sample sizes are large.

Probability

A measure of the likelihood that an event will occur, expressed as a number between 0 and 1, where 0 indicates impossibility and 1 indicates certainty.

Eligible Voters

Individuals who meet certain criteria, such as age and citizenship status, making them qualified to vote in an election.