Which of the Following Is a Difference Between a Forecast

question 50

Multiple Choice

Which of the following is a difference between a forecast and a projection?

• A) A forecast reflects conditions that may occur, whereas a projection reflects expected conditions based on current knowledge of trends in relevant factors.
• B) A forecast is typically for a short period, whereas projections can be made several years into the future projection.
• C) A forecast is based on hypothetical assumptions, whereas a projection is based on current knowledge of trends.
• D) A forecast invites rebuttal arguments of speculation and bias, whereas a projection is deemed to be the most appropriate indicator of expected future benefits.

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Definitions:

Specific Risk

A type of risk that affects a very small number of assets, such as a single stock or sector, also known as unsystematic or idiosyncratic risk.

Beta

In finance, it's a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. In statistics, it refers to the second type of error in a hypothesis test.

Regression Models

Statistical models used to estimate the relationship between a dependent variable and one or more independent variables.

Extrapolated

The process of estimating beyond the original observation range by assuming that existing trends continue.