The Index of Leading Indicators

question 143

Multiple Choice

The Index of Leading Indicators

• A)is the most widely used forecasting tool of economic fluctuations in the U.S.economy.
• B)consists of ten economic indicators that tend to lead general economic activity.
• C)is comprised monthly by the Conference Board,a private business group.
• D)is a useful tool when used with caution.
• E)all of the choices are correct.

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Definitions:

Multifactor CAPM

Generalization of the basic CAPM that accounts for extra-market hedging demands.

APT

The Arbitrage Pricing Theory, a multifactor model used to determine asset returns based on the relationship between a financial asset's expected return and its risks.

Hedge Portfolios

Investment portfolios designed to reduce the risk of adverse price movements in an asset, often by using derivatives such as options and futures.

Risk Premiums

The extra return expected by investors for taking on the risk of an investment compared to a risk-free asset.