Mean Reversion Refers to the Tendency for

question 17

Multiple Choice

Mean reversion refers to the tendency for

• A)futures prices to revert to the prices of the underlying securities.
• B)the long-run mean return on stocks to equal the long-run mean return on bonds.
• C)stocks with high returns today to experience low returns in the future and for stocks with low returns today to experience high returns in the future.
• D)financial analysts whose stock picks have earned above-normal returns in the past to be unable to pick stocks that will perform as well in the future.

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Definitions:

Mild Fatigue

A low level of tiredness or exhaustion that can usually be relieved by rest.

Common Cold

A viral infection of the upper respiratory tract that is characterized by symptoms such as sneezing, coughing, a sore throat, and a runny nose.

Influenza

A highly contagious viral infection that attacks the respiratory system, often referred to as the flu.

Allergy

An immune system reaction to a foreign substance, such as pollen, bee venom, pet dander, or a certain food, that doesn't cause a reaction in most people.