Suppose Returns on a Stock Are Lognormally Distributed with Expected

question 12

Multiple Choice

Suppose returns on a stock are lognormally distributed with expected (annualized) mean of of 0.10 and standard deviation of 0.20. What is the standard deviation of the continuously compounded return on the stock for one month?

• A) 1.77%
• B) 3.33%
• C) 5.77%
• D) 7.33%

---

Definitions:

Complexes

Deep-seated emotional perceptions or memories within the unconscious mind, significantly influencing thoughts and behaviors.

Psychological Functions

Fundamental cognitive processes described by Carl Jung, such as thinking, feeling, sensing, and intuiting, that underlie human behavior and personality.

Shadow Archetype

The dark side of the personality; the archetype that contains primitive animal instincts.

Society

A structured community of people bound together by similar traditions, institutions, or nationality.