A Historical Science: Scientists in Many Fields Can Test Their

question 33

Essay

A historical science: Scientists in many fields can test their hypotheses by proposing and carrying out experiments in which they can change variables in a controlled fashion. Astronomers, however, cannot adjust the properties of the objects they study. In what sense, then, can astronomers still conduct experiments?

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Definitions:

Firm-Specific Events

Occurrences that affect only a particular company or industry, in contrast to market-wide events that impact the broader economy or financial markets.

Single-Index Model

A simplified way to estimate the return on a security based on its sensitivity to a single market index.

Security Returns

The gains or losses from investing in a financial security, usually expressed as a percentage of the investment's initial cost.

Macro Events

Large-scale events that affect the broad economy or financial markets, including political changes, natural disasters, or widespread economic shifts.