You Have Observed That the Forecasts of an Investment Advisor

question 10

Multiple Choice

You have observed that the forecasts of an investment advisor consistently outperform the other reported forecasts. The efficient markets hypothesis says that future forecasts by this advisor

• A)may or may not be better than the other forecasts. Past performance is no guarantee of the future.
• B)will always be the best of the group.
• C)will definitely be worse in the future. What goes up must come down.
• D)will be worse in the near future,but improve over time.

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Definitions:

Benefits Decline

A situation where the advantages or value derived from an asset or service decrease over time.

Depreciable Base

The cost of an asset less its salvage value, representing the total amount that can be depreciated over its useful life.

Residual Value

Residual value is the estimated value of an asset at the end of its useful life, reflecting what it could be sold for or its salvage value.

Fixed-Percentage Method

The Fixed-Percentage Method is a depreciation technique where a constant percentage of the asset's book value is depreciated each year, resulting in decreasing annual depreciation expenses.