Noise Traders

question 51

Multiple Choice

Noise traders

• A) tend to lose money on stock trades, but help to stabilize the market.
• B) tend to make higher returns than do "buy-and-hold" investors.
• C) create additional risk in the market by increasing price fluctuations.
• D) trade only when they have inside information.

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Definitions:

Poisson Distribution

A numerical distribution detailing the probability of specific event counts happening over a determined timeframe or spatial range.

Negative Exponential Distribution

A probability distribution used to model the time between events in a Poisson process, representing the decay of quantities.

Average Arrival Rate

A metric used in queueing theory indicating the average number of entities (people, items, etc.) arriving at a system or service point per unit of time.

Average Service Rate

The average rate at which a service process can complete work or tasks, often measured over a specific period.