Which of the following statements is true of rational expectations?
A) Rational expectations forecasts are always correct.
B) For a trader with rational expectations, the expectation of an asset's price equals the optimal price forecast.
C) If traders have rational expectations, any announcement by a company will have an effect on its stock price, even if the market was already aware of the facts being announced.
D) If a trade really has rational expectations, he or she was always earn a greater than normal return on his or her financial portfolio.
Correct Answer:
Verified
Q4: If the dollar is expected to depreciate
Q5: If market participants rely only past stock
Q6: The gap between the yield on a
Q7: When market participants use all available information
A)market
Q8: If traders in a market have rational
Q10: When market participants have rational expectations,
A)they use
Q11: Which of the following is NOT a
Q12: George is trying to forecast the future
Q13: When market participants have rational expectations,
A)the information
Q14: If a company's sales begin to fall
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