Forecasts Based on the Extrapolation of Observed Trends and Relationships

question 33

Multiple Choice

Forecasts based on the extrapolation of observed trends and relationships are likely to be accurate,if ________.

• A)changes in expectations are properly considered
• B)policy actions are anticipated
• C)economic behavior is guided by rational expectations
• D)policy changes are understood to be permanent

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Definitions:

Coupon Bond

A debt security that pays the holder periodic interest payments until maturity, at which point the principal is repaid.

Current Yield

The annual income from an investment expressed as a percentage of the current market price.

Trading

The act of buying, selling, or exchanging financial assets in markets with the goal of making profits from price movements.