To Prove the Claim That "If an Individual's Income Goes

question 35

Multiple Choice

To prove the claim that "If an individual's income goes up, their demand for our product goes up" by Transposition it would suffice to show:

• A) any individual with falling demand must have falling income.
• B) every individual with increasing income has increasing demand.
• C) any individual with falling income has falling demand.
• D) None of the answers is correct.

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Definitions:

Firm's Beta

A measure of a stock's volatility in relation to the overall market; a beta greater than 1 means the stock is more volatile than the market, while a beta less than 1 means it is less volatile.

Single-Factor Market Model

A financial model that explains a security's returns as the outcome of a single market-wide factor and the security's sensitivity to that factor.

Unsystematic Risk

The risk associated with a specific company or industry that can be mitigated through diversification.

Residuals

Residuals are differences between observed and predicted values in statistical models, used to assess the fit of models to data.