Question: Q.2 Answer the following : (each should be between 150-200 words) i. The Rational Expectations Hypothesis implies that forecasts are correlated with forecasting errors but
Q.2 Answer the following : (each should be between 150-200 words)
i. The Rational Expectations Hypothesis implies that forecasts are correlated with forecasting errors but forecast revisions are not.
ii. If markers are semi-strong efficient then the random-walk model will not be a good predictor of future asset prices.
iii. The random walk model satisfies the optimal forecasting rule.
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
