If Trends Do Not Exist Then Policy Measures Designed to Reduce

question 4

True/False

If trends do not exist then policy measures designed to reduce deviations from trend are misguided.

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Definitions:

Real Rate Of Return

The annual percentage gain or loss on an investment, adjusted for inflation, providing a more accurate measure of the purchasing power of the return.

Risk Premium

The risk premium is the additional return an investor requires for choosing a risky investment over a risk-free asset, compensating for the extra risk undertaken.

Arithmetic Average Return

The simple average of a series of returns generated over a period of time.

Variance

A statistical measurement of the dispersion of returns for a given security or market index, indicating volatility.