On the First Day of Class, Dr

question 248

Multiple Choice

On the first day of class, Dr. Moskowitz is serious and tough as he reviews his rules for the course. After the first day, he is friendly and warm, but his students often continue to see him as unsympathetic and firm. This is due to

• A)the self-serving bias.
• B)cognitive dissonance.
• C)the primacy effect.
• D)lowballing.
• E)The recency effect.

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Definitions:

Beta

A scale for calculating the instability, or regular risk, of a security or combined investments relative to the market in its entirety.

Systematic Risk

The risk inherent to the entire market or market segment, not reducible through diversification.

Security Market Line

A line on a chart that displays the relationship between risk and the expected return of the market portfolio. It serves as a graphical representation of the Capital Asset Pricing Model (CAPM).

Beta Coefficient

A framework for quantifying the variability, or orderly risk, of a security or investment compilation when juxtaposed with the general market.