Which of the Following Is True

question 7

Multiple Choice

Which of the following is true

• A) EWMA is a particular case of GARCH (1,1) where the reversion rate is zero
• B) EWMA has a lower reversion rate than GARCH (1,1), but it is not zero
• C) EWMA has a higher reversion rate than GARCH (1,1)
• D) Sometimes EWMA has a higher reversion rate than GARCH (1,1) and sometimes it has a lower reversion rate than GARCH (1,1).

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Definitions:

Capital Goods

Long-lasting goods acquired by businesses to produce goods or services and not intended for immediate sale.

Savings Market

The financial market where savings are channeled from individuals or entities with surplus funds to those who need funds for investment.

Investment

The allocation of resources, such as capital or time, in the expectation of generating an income or profit.

Certificate Of Investment

A financial document representing a deposit with a specified interest rate and maturity date, often issued by banks.