Suppose You Are Conducting a Factorial Study with Variables a and B

question 9

Multiple Choice

Suppose you are conducting a factorial study with variables A and B. Your results reveal an interaction effect. This means that

• A) variable A is effective in changing performance only if variable B is also effective.
• B) the effect of independent variable A depends on what level of independent variable B they experience.
• C) one of the variables, A or B, can have an effect on performance only if the other does not.
• D) the effects of variable A and of variable B cancel each other out.

Apply the concept of arbitrage to identify risk-free profit opportunities.

Recognize the distinction between APT and the Capital Asset Pricing Model (CAPM).

Understand the role of the risk-free rate in determining the expected returns according to APT.

Appreciate the importance of factor models in explaining security returns.

---

Definitions:

Environmental Changes

Pertains to alterations in the external surroundings that impact organizations, including ecological, regulatory, and technological shifts.

Emergent Strategy

A strategy that evolves over time in an organization, often as a response to unexpected opportunities and challenges, rather than being planned from the start.

Incremental Changes

Small, gradual modifications or adjustments made in a process, system, or policy.

Discarded Strategy

A strategy that has been abandoned or rejected after analysis due to it being infeasible, ineffective, or misaligned with organizational objectives.