Which of the Following Refers to the Theory That People

question 62

Multiple Choice

Which of the following refers to the theory that people optimally use all available information when forecasting the future?

• A)rational expectations theory
• B)perfect expectations theory
• C)momentum expectations theory
• D)accommodating expectations theory

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Definitions:

Maturity Value

The amount payable to an investor at the end of a security's term or life, which typically includes the principal plus interest.

Principal

The original sum of money borrowed in a loan or the initial amount of money invested, excluding any interest or gains.

Simple Interest

A method of calculating interest whereby it is applied only to the principal amount, not including any previously earned interest.

Deposit Maturity

The end of a deposit term at which point the deposited funds plus any accrued interest are available to the account holder.