Which Statement Is Not True Concerning a Standard Test Market

question 109

Multiple Choice

Which statement is not true concerning a standard test market?

• A)It is a one-shot case study.
• B)Test markets are selected and the product is sold through regular distribution channels.
• C)Where external validity is important,at least four test markets should be used.
• D)All statements are correct.

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Definitions:

Nonsystematic Variance

The variability in a security's or a portfolio's returns that is not related to overall market movements.

Market Index

A method or metric to measure the performance of a group of stocks, representing a particular market or sector, to give investors a snapshot of its overall health.

Active Portfolio

An investment strategy where the portfolio manager makes specific investments with the goal of outperforming an investment benchmark index.

Nonsystematic Variance

The portion of a security's variance that is unique to the specific security and can be mitigated through diversification.