Using the data in the Table 1, what is the continuously compounded monthly retur

Question

Using the data in the Table 1, what is the continuously compounded monthly return between December, 2014 and January 2015? If the continuously compounded monthly return is the same for 12 months, what is the continuously compounded annual return?

A.-13.95% and -81.26%

A.-13.95% and -81.26%

B. -5.093% and -46.60% C. 2.340% and 31.99% D. -9.082% and -68.10% Table 1 Monthly Stock Price of Microsoft Stock (MSFT) Date Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 MSFT S46.45 S40.40 S43.85 S40.66 S48.64 S46.86 S44.15 S46.70 S43.52 S44.26 S52.64 S54.35 S55.48 4 6 10 12 13 14 15 16 17 18 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

Explanation / Answer

The correct option is Option A. -13.95% and -81.26% respectively. As the first month return between the stock prices is negative and comes out to be -13.95% and annual continuous compunded return are coming out to be -81.26%.

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