Let $S _ { T }$ Denote the Time- $T$ Price of a Stock And

question 14

Multiple Choice

Let $S _ { T }$ denote the time- $T$ price of a stock and $S _ { 0 }$ its current price.Suppose that for any $T$ , $\ln \left( \frac { S _ { T } } { S _ { 0 } } \right) : N \left( \mu _ { T } , \sigma ^ { 2 } T \right)$ for constant annual parameters $\mu$ and $\sigma$ .What does this imply about the returns process? Pick the most accurate of the following alternatives:

• A)The returns are independent and identically distributed over time.
• B)The returns are independent over time.
• C)The returns are normally distributed.
• D)None of the above.

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Definitions:

High-Draw Items

Products that significantly attract customers, resulting in high sales volume.

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An arrangement in manufacturing where machinery and staff are grouped together in a way that focuses on producing a single product or component.

Assembly Line

A manufacturing process in which parts are added to a product in a sequential manner to create a finished product efficiently.

Fabrication Line

A machine-paced, product-oriented facility for building components.