Logical Consistency and ______ Are the Two Pillars of Science

question 13

Multiple Choice

Logical consistency and ______ are the two pillars of science.

• A) reason
• B) empirical validity
• C) scope of application
• D) equivocal propositions

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Definitions:

Risk Premium

The extra return expected by an investor for holding a risky investment over a risk-free one.

Well-Diversified Portfolios

Investment portfolios that contain a wide variety of assets, aiming to minimize risk by spreading investments across different sectors or asset classes.

APT

Abbreviation for Arbitrage Pricing Theory, a multifactor financial model that describes the relationship between the return of a portfolio and the return of a single asset through a linear combination of macroeconomic factors.

CAPM

A model identifying the connection between the expected returns of assets, primarily shares, and their associated systematic risk, known as the Capital Asset Pricing Model.