Which of the Following Is a Correct Statement About Interpreting

question 23

Multiple Choice

Which of the following is a correct statement about interpreting an increase in risk premiums?

• A)An increase in risk premiums results only from expectations of greater default risk.
• B)An increase in risk premiums results only from expectations of lower liquidity.
• C)An increase in risk premiums results only from expectations of higher information costs.
• D)An increase in risk premiums can result from expectations of greater default risk, lower liquidity, or higher information costs.

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Definitions:

Confidence Interval

A set of values from sample statistics expected to cover the value of a not-yet-known population parameter.

Unbiased Estimator

A statistical estimator that is expected to equal the true parameter of the population being studied.

Consistent Estimator

A statistical property where an estimator of a parameter tends to converge to the true parameter value as the sample size increases.

Variance

A measure of variability that quantifies the spread of a set of data points around the mean.