If the Standard Deviation of the Continuously Compounded Returns on the Asset

question 15

Multiple Choice

If the standard deviation of the continuously compounded returns on the asset is 30% and the interval is a year,then the downside change is equal to:

• A)-26%.
• B)-54%.
• C)-33%.
• D)-39%.

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Definitions:

Cash Inflows

The total amount of money being received by a company during a specific period, from activities like sales, financing, and investments.

Required Rate

Often referred to as the required rate of return, it is the minimum return an investor expects to achieve by investing in a particular asset, considering its risk level.

Working Capital

A measure of a company's short-term financial health and operational efficiency, calculated as current assets minus current liabilities.

Net Present Value

A financial metric used to assess the profitability of an investment, calculating the difference between the present value of cash inflows and outflows over a period.