Predictive Validation Uses the Test Scores of All Applicants and Looks

question 31

True/False

Predictive validation uses the test scores of all applicants and looks for a relationship between the scores and future performance.

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Definitions:

Weighted Average Cost of Capital (WACC)

The average rate of return a company is expected to pay its security holders to finance its assets, weighted by the proportion of equity and debt financing.

Risk Characteristics

The identifiable attributes of a security, financial instrument, or investment that determine its risk profile, such as volatility, liquidity, and credit risk.

Divisions

Separate parts or branches of a company that operates under the greater corporate umbrella, each might focus on a specific product line or market segment.

Empirical Approach

A method of acquiring knowledge based on observation or experience rather than theory or pure logic.