In the Authors' View, the Correlational Link Between Cognitive Ability

question 6

Multiple Choice

In the authors' view, the correlational link between cognitive ability and socioeconomic status

• A) is probably causal in both directions
• B) is causal in that high socioeconomic status causes high cognitive ability
• C) is causal in that high cognitive ability causes high socioeconomic status
• D) is not well established

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Definitions:

Portfolio

A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including mutual funds and ETFs.

Security Market Line

A graphical representation of the expected return of investments as a function of their risk, showing how different levels of risk correlate with the market's rate of return.

Risk Premium

The extra return above the risk-free rate that investors require as compensation for the higher risk of investing in a particular asset.

Market Risk

The risk of losses in investments due to market variables, such as changes in interest rates, currency exchange rates, or stock market fluctuations.