If the Variability of the Returns on Large-Company Stocks Were

question 89

Multiple Choice

If the variability of the returns on large-company stocks were to decrease over the long-term, you would expect which one of the following as related to large-company stocks to occur as a result?

• A) Increase in the risk premium
• B) Increase in the average long-term rate of return
• C) Decrease in the 68 percent probability range of returns
• D) Increase in the standard deviation
• E) Increase in the geometric average rate of return

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Definitions:

Mere-Exposure Effect

The tendency to feel more positively toward a stimulus as a result of repeated exposure to it.

Repeated Exposure

involves the process by which repeated encounters with a stimulus lead to an increased liking for or familiarity with that stimulus.

Fundamental Attribution Errors

The tendency to overemphasize personality-based explanations for behaviors observed in others while underemphasizing the role and power of situational influences.

Social Facilitation

Any positive or negative effect on performance that can be attributed to the presence of others, either as an audience or as coactors.