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5 Written questions

5 Multiple choice questions

  1. if the earnings yield is lower than the yield on the 10-year TSY, the investor would shift their money into the less risky TSY
  2. 1. limitations to using economic data
    2. data measurement error and bias
    3. limitations of historical estimates
    4. the use of ex post risk and return measures
    5. non-repeating data patterns
    6. failing to account for conditioning information
    7. misinterpretation of correlations
    8. psychological traps
    9. model and input uncertainty
  3. often measured using the inventory to sales ratio
  4. let past disasters or dramatic events weigh too heavily on their forecasts
  5. r_target = r_neutral + [0.5(GDP_exp - GDP_trend) + 0.5(i_exp - i_target)]

4 True/False questions

  1. anchoring traptoo much weight on the first set of information received


  2. alpha researchformulating capital market expectations, related to systematic risk


  3. 7 step process to formulate capital market expectations1. determine those needed
    2. investigate historical performance
    3. identify valuation model
    4. collect good data
    5. use judgment to interpret current investment conditions
    6. formulate capital market expectations
    7. monitor performance/refine process


  4. beta researchformulating capital market expectations, related to systematic risk


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