The continuously compounded rate of return is calculated using the formula:

$r = \ln\left(\frac{S_1}{S_0}\right)$

Where:

• $S_1$ = current price = €42.00
• $S_0$ = price one year ago = €44.23

Calculation: $\frac{S_1}{S_0} = \frac{42.00}{44.23} = 0.9496$ $\ln(0.9496) = -0.0517 = -5.17\%$

Therefore, the continuously compounded rate of return is -5.17%, which corresponds to option C.

Key Concept: Continuously compounded returns use the natural logarithm of the price ratio, which is appropriate for modeling returns over time with continuous compounding.