What Is an Item Characteristic Curve

question 3

Multiple Choice

What is an item characteristic curve?

• A) a line that describes the probability of answering an item correctly plotted against the level of ability on the trait being measured
• B) a line that describes the distribution of responses to a single item on the trait being measured
• C) a histogram constructed for the responses to a single item on the trait being measured
• D) a line similar to the normal curve that results from graphing the discrimination index against difficulty level for the trait being measured ______.

Understand the impact of macroeconomic and firm-specific events on security returns.

Recognize the limitations of diversification in reducing portfolio risk.

Distinguish between systematic and nonsystematic risk in the context of the single-index model and portfolio management.

Interpret the security characteristic line (SCL) and its components, including alpha and beta.

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Definitions:

Bottom-Up Processing

A cognitive process by which we analyze information starting with the smallest or most detailed elements and working up to a comprehensive understanding.

Top-Down Processing

An approach to information processing guided by higher-level mental processes as we construct perceptions drawing from our experience and expectations.

Theory-Driven Processing

Cognitive processing influenced by prior knowledge, expectations, and theoretical perspectives.

Featural Analysis Theory

A theory suggesting that the recognition of objects involves the decomposition of scenes into their constituent features.