You observe the the price of a volatile stock over 100 trading days and record that...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You observe the the price of a volatile stock over 100 trading days and record that it either doubles or halves each day with equal likelihood. To be clear, the stock doubles (daily return of 100%) on a total of 50 days and gets cut in half (daily return of -50%) on 50 days during the 100-day observation period. What is an accurate estimate for the stock's daily realized volatility? 70% 48% 0% 100% 50% You observe the the price of a volatile stock over 100 trading days and record that it either doubles or halves each day with equal likelihood. To be clear, the stock doubles (daily return of 100%) on a total of 50 days and gets cut in half (daily return of -50%) on 50 days during the 100-day observation period. What is an accurate estimate for the stock's daily realized volatility? 70% 48% 0% 100% 50%
Expert Answer:
Related Book For
Corporate Finance A Focused Approach
ISBN: 978-1439078082
4th Edition
Authors: Michael C. Ehrhardt , Eugene F. Brigham
Posted Date:
Students also viewed these accounting questions
-
What factors influence income? Why is an accurate estimate of expenses important in budget planning? How do tax laws affect the budgeting process?
-
What was the average price of a room at two star, three star, and four star hotels around the world during the first half of 2013? The file Hotel Prices contains the prices in English pounds, (about...
-
It is April 7, 2014. The quoted price of a U.S. government bond with a 6% per annum coupon (paid semiannually) is 120-00. The bond matures on July 27, 2023. What is the cash price? How does your...
-
Knowledge Check 01 A company is in its first month of operations. Supplies worth $4,000 were purchased on January 5. At the end of the month supplies worth $3,000 were in hand. What adjusting entry...
-
What are the three components of the fraud triangle? How can they be helpful in fighting fraud in an organization?
-
Research auditing standards and describe the typical procedures that an auditor would perform in auditing a fair value estimate such as the value of Morris Mining's patent. Is the patent a Level 1,...
-
Show that the following eight vectors are pairwise orthogonal: \[\begin{aligned}& s 1=(1,1,0,0,0,0,0,0)^{T} \\& s 2=(0,0,1,1,0,0,0,0)^{T} \\& s 3=(0,0,0,0,1,1,0,0)^{T} \\& s 4=(0,0,,0,0,0,1,1)^{T}...
-
A bank has three types of accounts: checking, savings, and loan. Following are the attributes for each type of account: CHECKING: Acct No, Date Opened, Balance, Service Charge SAVINGS: Acct No, Date...
-
Order the simplification steps of the expression below using the properties of rational exponents. 567xyll (567xy11) (81) (7) (+) (+) 3x (7xy)* . (34). 7. x (2+). y(2+) 3. x. y (7. x. y) 31.7 2.x. y....
-
Newton Company manufactures and sells one product. The company assembled the following projections for its first year of operations: Variable costs per unit: Manufacturing: Direct materials . . . . ....
-
A town's population has been growing linearly. In 2004 the population was 6,200. By 2009 the population had grown to 8,100. Assume this trend continues. a. Find a linear model to represent the...
-
In 2023, Desi's Desserts had four employees. Two of the employees worked full time and earned salaries of $35,000 each. Two employees worked only part time, and each earned $5,000. The employer...
-
63. The above figure shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for raising goats on a common pasture. A quota to prevent the overuse of the...
-
consider $14 growing 11.6% each quarter how much will it be after 5 years
-
consider a company with revenues of $133 million, gross margins of 67%, operating margin of 41%, net margins of 20%, face rate of 15% and a reinvestment rate of 69%. how much free cash flow is it...
-
Using the relationship a = exp (ln (a)) -- for example, in Audit Class 1, a = e 6.13 = 459 -- we can determine the equation for Normalized Cumulative ATR for each audit class as a function of the...
-
What was the contract that legitimized a divine ruler's reign if proven they were worthy? the Taoist Seal the Mandate of Heaven the Legalist Mandate the Feudal Lands Policy
-
Cable Corporation is 60% owned by Anna and 40% owned by Jim, who are unrelated. It has noncash assets, which it sells to an unrelated purchaser for $100,000 in cash and $900,000 in installment...
-
What is meant by the term distribution policy? How have dividend payouts versus stock repurchases changed over time?
-
The Ulmer Uranium Company is deciding whether or not it should open a strip mine whose net cost is $4.4 million. Net cash inflows are expected to be $27.7 million, all coming at the end of Year 1....
-
Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,400 per year for 5...
-
Laura says she doesnt believe that humans were at one time chimpanzees or gorillas. Jeff says he doesnt believe it either. Explain why biologists also dont believe that humans are descended from...
-
Write a letter to Grandma telling her about drug resistance in living organisms. Explain to her why drug resistance is such a common phenomenonincluding why insects become more resistant to...
-
During a drought, the supply of seeds available to a finch population decreases. The smaller, softer seeds, which are easier to crack, are quickly eaten up. Finches with larger, stronger beaks are...
Study smarter with the SolutionInn App