Asked by Abdulaziz Bin Dharman on May 06, 2024
Verified
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 options are correct.
Forecasting
The process of making predictions based on past and present data trends, commonly used in finance to estimate future market movements or economic conditions.
Stock Market Values
The overall value of shares traded within a stock market, representing the market's perception of the total worth of its listed companies.
Uncertainty
The degree to which the outcome of an event, choice, or investment is unknown.
- Analyze the consequences of elevated Price-to-Earnings ratios and earnings yields on predictions for company expansion.
Verified Answer
TS
Tyshawn SmithMay 13, 2024
Final Answer :
C
Explanation :
The level of uncertainty in forecasting stock market values is inherently high due to the unpredictable nature of market forces, investor behavior, and global economic factors. This makes accurate predictions challenging.
Learning Objectives
- Analyze the consequences of elevated Price-to-Earnings ratios and earnings yields on predictions for company expansion.