The VAR method assumes that the volatility (standard deviation) of exchange rate movements changes over time.

Name: The VAR method assumes that the volatility (standard deviation) of exchange rate movements changes over time.
Brand: Quizplus
Rating: 4.7 (30 reviews)

Question

Quizplus · Accepted Answer

The VAR (Vector Autoregression) method does not inherently assume changing volatility over time; it is a statistical model used to capture linear interdependencies among multiple time series. Volatility changes are typically modeled using GARCH or similar models.

The VAR Method Assumes That the Volatility (Standard Deviation) of Exchange