Match the Assumption/principle in Column 1 with the Best Explanation

question 9

Essay

Match the assumption/principle in column 1 with the best explanation or illustration in column 2.

Recognize the utility theory basics and its application in investment decisions.

Understand the role of the capital market line (CML) in investment decisions.

Understand and calculate expected returns on risky and risk-free assets.

Comprehend the formation and expected outcome of portfolios containing risky and risk-free assets.

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Definitions:

Aptitude Tests

Assessments designed to measure an individual's potential to acquire certain skills or knowledge.

Behavioral Tests

Assessments used to measure and evaluate individuals' behavior and performance in specific tasks or situations.

SAT

A standardized test widely used for college admissions in the United States, assessing reading, writing, and mathematical reasoning abilities.

Culture-fair Tests

Culture-fair tests are designed to minimize the influence of cultural background, language, and education on test performance, aiming for equitable assessment of various groups.