Which of the Following Is an Advantage of the Back

question 18

Multiple Choice

Which of the following is an advantage of the back simulation approach?

• A)simplicity
• B)assumption of normally distributed asset returns
• C)calculation of correlations of asset returns
• D)All of the listed options are correct.

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Definitions:

Nominal Interest Rate

The interest rate stated on a loan or investment agreement, not adjusted for inflation, reflecting the gross interest per period.

Real Rate

The interest rate adjusted for inflation, reflecting the actual purchasing power of interest earnings.

Real Rate

The interest rate adjusted for inflation, reflecting the true cost of borrowing or the real yield on an investment.

Inflation

A rise in the general level of prices in an economy; an increase in an economy’s price level.