Question

Suppose that one of your classmates informs you that he has developed a method of forecasting stock market returns based on past trends. With a monetary investment from you, he claims that the two of you could profit handsomely from this forecasting method. How should you respond to your classmate?

Short answer

It is difficult to forecast the trends of market which might lead to maximize the profitability.

Step-by-step solution

Introduction

A stock market, also known as an equity market or a share market, is a gathering of buyers and sellers of stocks (also known as shares), which reflect corporate ownership claims. Shares of private enterprises offered to investors through equity crowdfunding platforms can be traded publicly as well as privately. Most investments are made with a specific investing strategy in mind..

Explanation 

Because stock prices tend to swing upward and downward, market projections should be heeded.

The profitability of the stock market is largely driven by market volatility. Examine the past pricing to determine the current price.

As a result, forecasting market trends that could lead to higher profits is difficult.