Which of the following describes a method used to predict future revenue yields by determining the historical average rate of change?

The method that accurately describes predicting future revenue yields by determining the historical average rate of change is historical trend analysis. This approach involves examining past revenue data over a specified period to identify patterns and trends, enabling practitioners to make informed projections about future revenue based on these observed trends. By calculating the average rate of change, analysts can create a more reliable forecast grounded in actual historical performance.

Historical trend analysis is particularly useful in budgeting and financial forecasting because it allows organizations to base their predictions on real data, reducing reliance on subjective judgment or assumptions. This empirical method is effective in capturing systematic changes in revenue due to factors such as economic conditions, policy changes, seasonality, and other external influences that tend to repeat over time.

In contrast, the other methods have distinct characteristics that differentiate them from historical trend analysis. For example, economic modeling incorporates broader economic variables and theories, while regression analysis focuses on establishing relationships between variables to forecast outcomes. Judgmental forecasting relies more on intuition and expert opinion rather than historical data trends. Each of these alternatives may serve specific purposes, but historical trend analysis remains the best fit for predicting future revenue through historical performance evaluation.