A Friend Asks You to Give Her a Brief Description

question 63

Multiple Choice

A friend asks you to give her a brief description of the rain shadow effect.Your response is that the rain shadow effect is a phenomenon caused when

• A)dry air (without moisture)ascends a mountain and after it reaches the top descends the other side causing a rain cloud formation that can produce unusual shadows.
• B)warm air with moisture ascends a mountain and after it reaches the top and descends the other side it produces rain cloud formations.
• C)warm air with moisture ascends a mountain and as it nears the top the air is so heavy with moisture that the moisture is lost as rain or snow and as the air mass descends the other side of the mountain there is no moisture to release causing a rain shadow.
• D)warm air with no moisture ascends a mountain and as it nears the top the air is so heavy with moisture that it has picked up that it causes the air mass to descend the other side of the mountain releasing rain or snow causing a rain shadow.

---

Definitions:

Risk-free Interest Rate

The return on investment with no risk of financial loss, typically represented by government bonds.

Stock Price Volatility

This term describes the degree of variation of a trading price series over time as measured by the standard deviation of returns.

Intrinsic Value

The inherent worth of a financial asset, determined through fundamental analysis without reference to its market value.

Strike Price

The specified price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying security or commodity.