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After having viewed the video clips and worked through the guided reading, please respond to the below discussion prompt. You should post your initial response
After having viewed the video clips and worked through the guided reading, please respond to the below discussion prompt. You should post your initial response by the date indicated in the module calendar. Please be sure to reference your sources in appropriate Harvard formatting and to provide substantive evidence of any claims that you make. Where appropriate, include personal anecdotes, statistics, and references to additional reading or materials. After you have posted your initial response, visit the forum again over the coming days to read the responses of your peers. You should respond to at least two other students by asking them to elaborate on a point, providing a counter-argument, suggesting a topic for debate, or referring back to the guided reading or video clips. Question 1: Many macroeconomic indicators, such as unemployment, are routinely seasonally adjusted before being published by statistical offices. Here is an example of such a time-series cleaning for unemployment in the United Kingdom according to Eurostats methodology: Unemployment data is collected in a household survey and a 3-month moving average is applied to remove any non-repeating volatility. The seasonal component is then removed from the time-series on an annual basis. Find how unemployment is calculated in your country and critically asses the limitation of the model. Evaluate how the method used makes unemployment more or less representative of the real situation on the job market. Question 2: Equity and government bonds are a natural pair in any well diversified portfolio, because the price of stocks tends to increase in value, while bonds tend to decrease when times are good. The opposite is true during downturns. Critically evaluate how this relationship works, and use mean-variance analysis to explain how it can be used to lower overall risk in a portfolio. Use examples
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