The Key Assumption of the Preferred Habitat Theory Is That

question 69

Multiple Choice

The key assumption of the preferred habitat theory is that investors

• A)view bonds of different maturities as perfect substitutes.
• B)view bonds of different maturities as completely unsubstitutable.
• C)always choose the bond with the highest expected return, regardless of maturity.
• D)care about both expected returns and maturity.

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Definitions:

Expected Cell Frequency

In the context of a contingency table, it is the number of observations expected in a cell based on the hypothesis being tested.

Chi-square Test of Independence

The Chi-square Test of Independence is a statistical test used to determine if there is a significant relationship between two categorical variables.

Degrees of Freedom

The number of independent values or quantities which can be assigned to a statistical distribution or to a system without violating any constraint.

Contingency Table

A tabular method to represent and analyze the relationship between two or more categorical variables, showing the distribution of one variable across levels of the other variable(s).