Capital Markets Expectations Quiz

Without looking at your book, answer the following: 1) Name the three distinct approaches to Economic Forecasting. 2) Describe the basic advantages and disadvantages of each.

hmm, fed model, yardeni and tobin q

  1. Econometrics 2. Leading Indicator 3. Checklist

mcap, the 3 you mention are for Equity Market ( or asset , I forget which ) valuation

Oh man. Thanks. I am doomed.

suvey too

janakisri Wrote: ------------------------------------------------------- > 1. Econometrics > 2. Leading Indicator > 3. Checklist thought of the first two but no chance of recalling the third (still cant think of what it means!) Approches - Pros - Cons 1. Econometrics - multifactor factor interaction - structural breaks, data intensive, past indicator of future issue 2. Indicators - simple quick and easy - often lagged indicators, contradicting indicators. 3.

pimpineasy Wrote: ------------------------------------------------------- > suvey too Capital Market Expectations is by survey, statistical models, DCF models, Risk Premium and Fin Market equil own analyst judgemet Economic Forecasting is by 1. Econometrics 2. Leading Indicator 3. Checklist taken from vol3 page 109

add panel method (like survey but with ongoing set of experts)

econometric models, leading indicators and checklist approach

Let me “dump” what’s in my mind…too full now.:slight_smile: 1. Econometrics: +) can build a complex model; once model built, can have a quick forecasting, precise. -) too complex, not easy to understand; may need to interpret the result; not working well in a downward market. 2. Economic Indicator: +) simple and easy to use; can be combined for diff purpose; available from third party sources; research supports its usafulness. -) the economic condition may change over time; some forecasting from leading indicator may be misleading. 3. Checklist: +) easy to use, forgot… -) may be time intensive? subjective. may not work for complicated investment objectives.