In investment models, a useful approach for generating future returns and inflation factors from historical data is:
A) the NPV approach
B) the scenario approach
C) the averaging approach
D) the trend analysis approach
E) none of these choices

Question

Quizplus · Accepted Answer

The scenario approach involves creating different possible scenarios for future economic and market conditions based on historical data and other relevant factors. This approach allows for a more comprehensive analysis of potential outcomes and is commonly used in investment modeling. The other approaches listed are useful in different contexts but are not as directly related to generating future returns and inflation factors.

In Investment Models, a Useful Approach for Generating Future Returns