5 Written questions
5 Multiple choice questions
- 1. Responsible fiscal and monetary policies?
2. What is the expected growth?
3. Does the country have reasonable currency values and current account deficits?
4. Is the country too highly levered?
5. What is the level of foreign exchange reserves relative to short-term debt?
6. What is the government's stance regarding structural reform?
- let past disasters or dramatic events weigh too heavily on their forecasts
- formulating capital market expectations, related to systematic risk
- overly conservative in forecasts because you want to avoid the regret from making extreme forecasts that could end up being incorrect
- concerned with earning excess returns through the use of specific strategies within specific asset groups
4 True/False questions
status quo trap → analyst's predictions are highly influenced by the recent past
Fed model → 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
Nine problems encountered in producing forecasts: → 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
inventory cycle → often measured using the inventory to sales ratio