8010 Exam Dumps | A stock that follows the Weiner process has its future price determined by:

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Question 51/87

A stock that follows the Weiner process has its future price determined by:

A. its current price, expected return and standard deviation

B. its standard deviation and past technical movements

C. its expected return and standard deviation

D. its expected return alone

Correct Answer: A

Explanation
The change in the price of a security that follows a Weiner process isdetermined by its standard deviation and expected return. To get the price itself, we need to add this change in price to the current price. Therefore the future price in a Weiner process is determined by all three of current price, expected return and standard deviation.

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