Question

definition of asset drifit rate

Answer 1

I guess you want to know and understand "Asset Drift Rate". I am answering under this assumption because there is nothing called "Asset drifit rate".

Let's first understand Drift and Drift Rate in general before moving to Asset Drift Rate. There are many complex and complicated definition of drift and drift rate. Let me explain the two terms to you in the simplest words.

Drift and Drift Rate

Things have tendency to change or move away with time. Stock price changes, interest rate changes, exchange rate changes almost continuously. This change is called drift. Drift is thus a change in the value or mean value or average value of any variable within an infinitesimally small time frame.

The rate at which this change in the value or mean value or average value of any variable takes place is called drift rate. It's the change in the value or mean value or average value of any variable per unit time.

Asset Drift Rate

Thus asset drift rate will be the rate at which the value or mean value or average value of the asset changes within an infinitesimally small time frame. It's the change in the value or mean value or average value of any variable per unit time.

Let's say at t = 0, the value of the asset was A₀ and at t = infinitesimally small increment, say "dt", the value of asset changed to A_t.

Hence, Asset drift = A_t - A₀

and Asset drift rate = Asset drift / time = (A_t - A₀) / dt