_________Measurement Errors Arise When a Test Consistently Measures Something Other

question 46

Multiple Choice

_________measurement errors arise when a test consistently measures something other than the trait for which it was intended.

• A) Random
• B) Systematic
• C) Unsystematic
• D) Probabilistic

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Definitions:

Unsystematic Risk

The risk associated with an individual asset or firm, which can be mitigated through diversification.

Covariance

A statistical measure that calculates the degree to which two variables move in relation to each other.

Correlation

The statistical measure of how two securities move in relation to each other, ranging from -1 to +1.

Risky Assets

Financial instruments that carry a higher degree of risk compared to risk-free assets, potentially leading to higher returns or losses.