Which of the Following Theories of Expectations Holds That Individuals

question 65

Multiple Choice

Which of the following theories of expectations holds that individuals form expectations by looking only to past values of the variable to be forecast?

• A)Rational expectations theory
• B)Certainty equivalent theory
• C)Expected value analysis
• D)Adaptive expectations theory

---

Definitions:

European Put

A type of option contract that gives the holder the right, but not the obligation, to sell a specified asset at a predetermined price before or at the option's expiration date, but only exercisable in Europe.

Specified Price

A definite price point set in a contract or agreement, often referring to the predetermined price in financial transactions.

Expiration Date

The date on which an option, right, or warrant expires, or the date when a perishable product is no longer considered safe or effective to use.

Bretton Woods

A system of monetary management that established the rules for commercial and financial relations among the United States, Canada, Western Europe, Australia, and Japan after World War II.