When You Let Go of an Apple, You Expect It

question 32

Multiple Choice

When you let go of an apple, you expect it to fall to the ground.This is because

• A) down is the only direction it can go in.
• B) apples always move directly toward the largest object.
• C) your science teacher has told you that is the only possibility.
• D) red colors are attracted to green colors.
• E) there has been a past pattern of objects always falling toward the Earth.

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Definitions:

Arbitrage Opportunities

Situations where a financial instrument, or a combination of financial instruments, can be bought and sold simultaneously in different markets to profit from price discrepancies.

Risk-Free Rate

The return on investment with no risk of financial loss, often represented by the yield on government securities.

Nonsystematic Standard Deviation

A measure of variance in a portfolio's total returns attributable to factors specific to individual securities, as opposed to the market.

Equally-Weighted Portfolio

An equally-weighted portfolio is an investment strategy that gives the same weight, or importance, to each asset in the portfolio, regardless of the size or market value of the companies.