One of the problems with attempting to forecast stock market values is that
A)there are no variables that seem to predict market return.
B)the earnings multiplier approach can only be used at the firm level.
C)the level of uncertainty surrounding the forecast will always be quite high.
D)dividend payout ratios are highly variable.
E)none of the above.

Question

Quizplus · Accepted Answer

Even with the most sophisticated models and analysis, stock market forecasting is inherently uncertain due to the volatility and unpredictability of the market. Therefore, the level of uncertainty surrounding the forecast will always be quite high. Choices A, B, and D are incorrect as there are variables that can predict market return, the earnings multiplier approach can be used at the market level, and while dividend payout ratios may vary, they are not the sole determinant of market forecasting.

One of the Problems with Attempting to Forecast Stock Market