In interpreting the standardized unexpected earnings (SUE) momentum measure, it can be concluded that a given size forecast error is: A) less meaningful the smaller the historical size of forecast errors. B) scaled by the earnings surprise. C) more meaningful the smaller the historical size of forecast errors. D) more meaningful the larger the historical size of forecast errors.
C) straight outta the book (I cheated)
didn’t quite make sense out of C, smaller the better? or bigger the better!!!
C A surprise of a given size is more meaningful if the surprises are usually smaller (like a utility company posting a 20% surprise loss vs. UBS posting a 20% “surprise” loss).