Stock returns are good predictor of future returns

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Reference no: EM131853736

In finance, we generally assume that stock returns are normally distributed. Which of the following are common reasons for why this assumption is flawed:

I. Stock return exhibit skewness and returns

II. Stock returns are a good predictor of future returns

III. Stock returns are truncated at -100%

IV. The average equity risk premium is 7.2%

a. I only

b. I and II only

c. II and III only

d. II and IV only

Reference no: EM131853736

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