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4

B is the correct choice. I honestly would wish multiple choice would not even exist. It is the worst way of testing knowledge in my opinion. Without knowing the details of what was taught, I would say choosing C is definitely the wrong answer. The df in t-student can be used to estimate/model fat tails. According to Fat Tails in Financial Return ...


3

It is not negative returns that are an issue. Assume the following prices in two periods: $P_o = 100$ ; $P_1 = 99$ Standard percent calc: $$\frac{P_1}{P_0}-1 = -0.01$$ which is -1% . Using the natural logarithm you get $$ln(99)-ln(100) = -0.01005$$ which is essentially identical. Negative prices are an issue - but these are not observed for many economic ...


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