Monetary and Asset or Portfolio Models Have Not Been Very

question 1

Multiple Choice

Monetary and asset or portfolio models have not been very successful in forecasting exchange rates,especially in the short run,due to which of the following reasons?

• A)Exchange rates are strongly affected by new information that is characteristically unpredictable
• B)Although offering theoretical support for the conclusions drawn by the models,the models are weak econometrically speaking
• C)Expectations of exchange market participants often become self-fulfilling
• D)Both A & C

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Definitions:

Social Allergy Effect

A psychological phenomenon where repeated small irritations in close relationships lead to a significant negative reaction.

Annoyed

The feeling of being irritated or bothered by something or someone, often leading to discomfort or frustration.

Habits

Basically, routine behaviors that are performed regularly and often automatically.

Social Allergy Effect

A phenomenon where repeated exposure to certain behaviors or habits of others leads to an increasingly negative and irritated reaction over time.