Primary restriction of making demand, Financial Accounting

Assignment Help:

Q. Primary restriction of making demand?

The primary restriction of making demand forecasts lies in the fact that they are forecasts and hence their reliability is unknown. Most predicts are based upon a mix of historic information and expectations in relation to relevant influential variables. For instance the exchange rate predicts where the highest probability is attached to a rate of 1·54 Euro/£ is probable to be based on the statistical pattern of historic exchange rates including the standard deviation such that 1·54 Euro/£ constitutes the most frequently observed rate. This doesn't but necessarily means that the rate will be similar in the future - history doesn't always repeat itself.

Another restriction relates to the nature of the data being forecast. Weather forecasts are notoriously undependable because nature is such an uncontrollable force. Even if the UK climate has been hot on average for the past five years doesn't imply that this will be the case in the future. The factors which utter the weather are uncontrollable and consequently to a large degree unpredictable.

The forecast as well runs into problems because it seeks to link two unrelated variables. The state of the weather is completely independent of the exchange rate and vice versa as well as they can only be linked in the way suggested by the table if the range of alternative observations is restricted. This is eventually a distortion of a reality which is far more complex.


Related Discussions:- Primary restriction of making demand

Compensation, how to treat salary compensation given to an employee how to ...

how to treat salary compensation given to an employee how to show this in company account

Find the price of a treasury bond , The time t= 0 continuously compounded...

The time t= 0 continuously compounded term structure of interest rates is given by R(0 , T) = 0. 05 - 0. 005 e - 0.10 T . Find the price of a Treasury bond with exactly 3

Redemption of debt, Q. Redemption of debt? Equity finance is permanent ...

Q. Redemption of debt? Equity finance is permanent capital that doesn't need to be redeemed while debt finance will need to be redeemed at some future date. Redeeming a huge am

Limitations of financial accounting, LIMITATIONS O F FINANCIAL ACCOUNT...

LIMITATIONS O F FINANCIAL ACCOUNTING 1. Simply transactions which can be calculated in terms of money can be recorded in the books of accounts. Actions, though important t

Items reducing the deficit-liquidation of companies, Items reducing the def...

Items reducing the deficit: Items reducing the deficit would include: (a)    Profits from trading; (b)    Estimated profit on the realisation of assets. Notes: (a) Whe

Nominal interest rate on new bonds?, Debra Motors's 14% coupon rate, semian...

Debra Motors's 14% coupon rate, semiannual payment, $1,000 par value bonds that mature in 20 years are callable 3 years from now at a price of $1,075. The bonds sell at a price of

What are the potential benefits of implementing abc, Question 1: (a) De...

Question 1: (a) Define program evaluation. (b) Discuss the four types of program evaluation that are usually carried in the Public Sector. Question 2 (a) You have

Calculate the possible price ranges for stock, Purchase price $2.15 Exer...

Purchase price $2.15 Exercised Price: $37.50 Currently Trading at $37.00 In order to make the decision on the best course of action, two tables of calculations are needed:

Determine the net worth of personal assets, Igor and Angela were married in...

Igor and Angela were married in 2005, separated in 2011, and divorced recently. At the time of marriage, each had some investments and personal assets. They both worked during the

Overhead efficiency variance, The following information is for the third qu...

The following information is for the third quarter of this year:   Planned Actual   Production 92,000 units

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd