Estimates of GNP - CFA® Level 1 Exam Prep

Estimates of GNP

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Estimates of GNP -

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A. are used to estimate aggregate net sales for the firms in a stock market series such as the S&P 400. About 90% of the variance in percentage changes in S&P 400 net profits can be attributed to percentage changes in the GNP. Net sales are more volatile than GNP.

B. are used to estimate aggregate net profits for the firms in a stock market series such as the S&P 400. About 30% of the variance in percentage changes in S&P 400 net profits can be attributed to percentage changes in the GNP. The GNP is more volatile than net profits.

C. are used to estimate aggregate net sales for the firms in a stock market series such as the S&P 400. About 40% of the variance in percentage changes in S&P 400 net profits can be attributed to percentage changes in the GNP. Net sales are more volatile than GNP.

D. are used to estimate aggregate net profits for the firms in a stock market series such as the S&P 400. About 80% of the variance in percentage changes in S&P 400 net profits can be attributed to percentage changes in the GNP. Net profits are more volatile than GNP.

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A. B. C. D.

There is a strong relationship between GNP percentage changes and S&P 400 net sales percentage changes; about 40% of the variance of S&P 400 net sales percentage changes is due to percentage changes in the GNP. Estimating GNP changes allows one to then estimate net sales changes based on a regression formula.

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