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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.
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