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Basic Question 5 of 9
If we determine that the price of a certain stock has increased over the last decade, but its growth rate has remained relatively constant. The model that is most appropriate for predicting the future prices of the stock is:
A. Pt = b0 + b1 (t)
B. ln(Pt) = eb0 + b1 (t)
C. ln(Pt) = b0 + b1 (t)
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Learning Outcome Statements
calculate and evaluate the predicted trend value for a time series, modeled as either a linear trend or a log-linear trend, given the estimated trend coefficients;
describe factors that determine whether a linear or a log-linear trend should be used with a particular time series and evaluate limitations of trend models;
explain the requirement for a time series to be covariance stationary and describe the significance of a series that is not stationary;
CFA® 2025 Level II Curriculum, Volume 1, Module 5.