Suppose You Are Testing a Treatment for AIDS Patients and Find

question 29

Multiple Choice

Suppose you are testing a treatment for AIDS patients and find that 75% respond very well whereas 25% show no improvement or decline in health. You should:

• A)conclude that you have proven the effectiveness of the drug.
• B)conclude that only 75% of AIDS patients should be treated.
• C)review the results, modify the drug or the dosage, and repeat the experiment.
• D)discontinue experimentation with this treatment because 25% of patients did not improve.
• E)begin work on developing a new drug.

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Definitions:

Behavioral Finance

An area of study focusing on how psychological influences and biases affect the financial behaviors of investors and financial markets.

Rational

Characterized by clear, logical thinking, often referring to decision-making that maximizes benefit.

Irrational

Acting without reason or understanding, often defying logical or expected behavior, particularly in economic contexts referring to market participants.

Weak-form Efficient

A form of market efficiency that asserts all past trading information is fully reflected in stock prices, and thus, technical analysis cannot consistently produce excess returns.