2 Ch 10 Questions and answers, tran.docx - Ch 10 Questions and Answers Question 1 The daily volatility of an asset is 2 What is the standard deviation

2 Ch 10 Questions and answers, tran.docx - Ch 10 Questions...

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Ch 10 Questions and Answers Question 1 The daily volatility of an asset is 2%. What is the standarddeviation of the percentage price change over three days? Question 2 The yearly volatility of an asset is 25%. What is thestandard deviation of the percentage price change in onetrading day?Assume that a normal distribution with zero mean, estimate 95%confidence limits for the percentage price change in one day. 1
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Question 3Why do traders assume 252 rather than 365 days in a yearwhen using volatilities?
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