A Disadvantage of the Historic or Back Simulation Model for Quantifying

question 27

Multiple Choice

A disadvantage of the historic or back simulation model for quantifying market risk includes

• A)calculation of a standard deviation of returns is not required.
• B)calculation of the correlation between asset returns is not required.
• C)estimates of past returns used in the model may not be relevant to the current market returns.
• D)it accounts for non-standard return distributions.
• E)None of the options.

Distinguish between random and non-random sampling techniques and their implications for research validity.

Understand the role and importance of cultural competence and diversity in research generalizability.

Comprehend the basics of hypothesis testing and the interpretation of research results.

Realize the consequences of biased sampling on research outcomes.

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Definitions:

Expected Value

A calculated average of all possible values for a random variable, reflecting the expected level of gain or loss over time for a given situation or set of outcomes.

Perfect Information

Perfect information is a situation in which all participants in a transaction have complete and identical knowledge about all aspects of the transaction, leaving no room for uncertainty.