The distribution of returns, measured over a short interval of time, like daily returns, can be approximated by:
A) Normal distribution
B) Lognormal distribution
C) Binomial distribution
D) none of the above

Question

Quizplus · Accepted Answer

Daily returns are often modeled using a normal distribution because they can take on both positive and negative values and tend to cluster around a mean.

The Distribution of Returns, Measured Over a Short Interval of Time