Reading 23: Capital Market Expectations－LOS m economic, contrast

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 CFA Institute Area 6: Economics
Session 6: Economic Concepts for Asset Valuation in Portfolio Management
Reading 23: Capital Market Expectations
LOS m: Compare and contrast the major approaches to economic forecasting.

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Which of the following is NOT a characteristic of econometrics as used in economic forecasting? Econometrics:

A) may accurately model real world conditions.

B) provides a straightforward method of creating a model.

C) can provide precise quantitative forecasts of economic conditions.

D) is better at forecasting expansions than recessions.

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Answer and Explanation

Econometric analysis can actually be difficult and time intensive to create.

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SchweserOnline CFA: SchweserPro 2008 CFA Level 3
CFA Institute Area 6: Economics
Session 6: Economic Concepts for Asset Valuation in Portfolio Management
Reading 23: Capital Market Expectations
LOS m: Compare and contrast the major approaches to economic forecasting.

Question ID#: 44482

Acronyms

F-Table

Z-Table

T-Table

Chi-Table

Durbin-Watson

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Which of the following is NOT a characteristic of a checklist approach as used in economic forecasting? A checklist approach:

A) does not allow for changes in the model over time.

B) is simple.

C) requires subjective judgment.

D) may not be able to model complex relationships.

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Answer and Explanation

A checklist approach actually allows for changes in the model over time.

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Which of the following is NOT a characteristic of economic indicators as used in economic forecasting? Economic indicators:

A) can be adapted for specific purposes.

B) are difficult to understand and interpret.

C) are not consistently accurate as economic relationships change through time.

D) have an effectiveness that has been verified by academic research.

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Answer and Explanation

Economic indicators are actually easy to understand and interpret.