Regression Toward the Mean Is the

question 113

Multiple Choice

Regression toward the mean is the

• A)tendency for unusual scores to fall back toward a distribution's average.
• B)basis for all tests of statistical significance.
• C)reason the range is a more accurate measure of variation than the standard deviation.
• D)reason the standard deviation is a more accurate measure of variation than the range.

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Definitions:

Convexity

A measure of the curvature in the relationship between bond prices and bond yields that demonstrates how the duration of a bond changes as the interest rate changes.

Modified Duration

A measure that estimates the price sensitivity of a bond to a one percent change in interest rates, adjusting for the changing yield to maturity.

Yield To Maturity

The total return anticipated on a bond if the bond is held until it matures.

Duration

A measure of the sensitivity of the price of a bond or other fixed-income investment to changes in interest rates, typically expressed in years.