Financial Risk Manager Part 1
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Define trend as used in business and economics.
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NNikitesh
A
A curve that represents the change in a series of data points collected over a given period of time
B
A straight line extrapolated from past and present values to forecast future values of a given variable
C
A pattern of gradual change in output as a result of data points moving in a given direction over time, and which can be represented by a line, curve, or graph
D
A pattern of gradual change in output as a result of data points moving in a positive direction over time, and which can be represented by a line, curve, or graph
Explanation:
The correct answer is C. Trend refers to a gradual change in the output of a random variable as a result of a tendency of data points of the variable to move in a given direction (positive or negative) over time. The trend can take the form of a line or even a nonlinear form such as an exponential form.
Explanation:
- Option A is incorrect because it describes a curve representing change, but doesn't capture the gradual nature or directional movement over time.
- Option B is incorrect because it specifically mentions a straight line and forecasting, which are too restrictive - trends can be nonlinear and don't necessarily involve forecasting.
- Option C is correct as it accurately describes a pattern of gradual change with data points moving in a given direction (positive or negative) over time, which can be represented by various forms (line, curve, or graph).
- Option D is incorrect because it limits the direction to positive only, whereas trends can be either positive or negative.
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