Use the Following Information to Answer Questions (16)-(18)

question 21

Multiple Choice

Use the following information to answer questions (16) -(18) . From a random sample of workers at a large
corporation you find that 58% of 200 went on a vacation last year away from home for at least a week.
-An approximate 95% confidence interval is (0.50, 0.66) . Which of the following statements is a correct interpretation?

• A)95% of the coworkers fall in the interval (0.50, 0.66).
• B)We are 95% confident that the proportion of coworkers who went on a vacation last year away from home for at least a week is between 50% and 66%.
• C)There is a 95% chance that a random selected coworker has gone on a vacation last year away from home for at least a week.
• D)We are 95% confident that between 50% and 66% of the samples will have a proportion near 58%.

Recognize the significance of beta in measuring a portfolio's market risk and its limitations.

Understand the role and limitations of multifactor models in explaining security returns.

Examine how benchmark errors impact the interpretation of CAPM tests.

Assess the impact of market efficiency on the validity of CAPM.

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Definitions:

Wealth

The total value of all financial and non-financial assets owned by an individual, company, sector, or nation minus any liabilities.

Expected Utility Function

A mathematical representation of an individual's preference for certain outcomes over others, considering the uncertainty of those outcomes.

Utility Function

A mathematical representation of a consumer’s preference ordering over a choice set, used to describe how consumers allocate their income to maximize their satisfaction.

Risk Neutral

An attitude or preference indicating indifference between choices with uncertain outcomes, focusing instead on the expected values.