A Disadvantage of the Probabilistic Approach to Estimating an Asset's

question 48

Multiple Choice

A disadvantage of the probabilistic approach to estimating an asset's returns is:

• A) history always repeats itself.
• B) it does not require one to assume that the future will look like the past.
• C) recent history is more important than future risk.
• D) that the range of possible outcomes is often broader than the scenarios used.

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Definitions:

Mean

The arithmetic average of a set of numbers, calculated by adding all the numbers and dividing by the count of numbers.

Standard Deviation

A gauge for determining the extent of fluctuation or diversity in data points around the central value.

Scores

Quantitative assessments that represent the outcomes or achievements of individuals based on performance or measurement criteria.

Variance

A measure of the dispersion of a set of data points around their mean value, demonstrating how spread out the data points are.