The Deductive Scientist

question 28

Multiple Choice

The deductive scientist:

• A) is most interested in gathering data on a phenomenon for which no theoretical explanation has been offered
• B) emphasizes the empirical rather than the theoretical approach
• C) gathers data only within a guiding theoretical framework
• D) would rather collect data than generate theories

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Definitions:

Portfolio Return

The overall gain or loss of an investment portfolio, considering all sources of income and capital gains.

Single Factor APT

Arising from the Arbitrage Pricing Theory, this is an asset pricing model based on a single factor, typically the market return, to predict security returns.

Arbitrage Opportunities

Situations where a trader can profit from discrepancies in prices across different markets or instruments without risk.

Risk-Free Rate

The interest rate at which an investor can lend money with no risk of default, often represented by the yield on government bonds.