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Aggregate Forecasts Are Always Better Than the Set of Component

question 55

Multiple Choice

Aggregate forecasts are always better than the set of component forecasts because the standard deviation of the total (T) of (n) components is equal to the _____ multiplied by the standard deviation of the individual components.


Definitions:

Exchange Rate

The rate at which one currency can be exchanged for another, usually used in international trade and finance.

Counterparty

Second borrower in currency swap. Counterparty borrows funds in currency desired by principal.

Currency Swap

A Currency Swap is a financial derivative that involves the exchange of principal and interest payments in one currency for those in another, commonly used by companies to manage foreign exchange risk.

Exchange Rate Risk

The potential for loss due to fluctuations in the foreign exchange rates affecting investments or transactions.

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