Which of the Following Is True

question 2

Multiple Choice

Which of the following is true

• A) GARCH models incorporate mean reversion; EWMA models do not
• B) EWMA models incorporate mean reversion; GARCH models do not
• C) Both GARCH and EWMA models incorporate mean reversion
• D) Neither GARCH nor EWMA models incorporate mean reversion

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Definitions:

Equity Options

Financial derivatives that give the holder the right, but not the obligation, to buy or sell a stock at a specified price before a certain date.

CCA Tax Shield

A deduction that allows businesses to depreciate the cost of an asset over time for tax purposes, reducing their taxable income.

Lessee

A lessee is a person or entity who rents land or property from a lessor under the terms of a lease.

Lessor

An entity or individual that rents out an asset or property to another party, known as the lessee.