Suppose Returns on a Stock Are Lognormally Distributed with Expected

question 1

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 expected simple return on the stock for one month?

• A) 0.83
• B) 1.01
• C) 1.08
• D) 1.13

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Definitions:

Central Route

A concept in the Elaboration Likelihood Model of persuasion that involves the thorough and thoughtful consideration of arguments leading to attitude change.

Persuasion

The process of influencing someone's beliefs, attitudes, intentions, motivations, or behaviors through communication and various techniques.

Motivated

Having a strong desire or willingness to act and achieve specific goals.

Commercial

Relating to or engaged in commerce; intended for or pertaining to the selling and buying of goods and services.