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Basic Question 3 of 11
The theory suggesting that prices and returns eventually move back towards the average is called:
B. Covariance stationary.
C. Mean reversion.
D. Zero error autocorrelation.
A. Auto-regression.
B. Covariance stationary.
C. Mean reversion.
D. Zero error autocorrelation.
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I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
explain the instability of coefficients of time-series models;
describe characteristics of random walk processes and contrast them to covariance stationary processes;
CFA® 2025 Level II Curriculum, Volume 1, Module 5.