A Researcher Determines That the Crime Rate in a Large

question 651

Multiple Choice

A researcher determines that the crime rate in a large city is related to the phases of the moon. She concludes that the gravitational pull of the moon influences human behavior. She does not understand

• A)the dangers of a single example.
• B)the difference between observation and inference.
• C)the difference between correlation and causation.
• D)that the Barnum effect occurs only in ten-year cycles.

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Definitions:

Residual Standard Deviation

A statistical measure of the amount of variance in investment returns not explained by the beta in the Capital Asset Pricing Model (CAPM).

Geometric Average Return

Is the average rate of return of a set of values calculated using the products of the terms.

Arithmetic Return

The simple average of periodic returns of an investment over a specified time frame.

Dollar-Weighted Return

A method of calculating an investment's return that accounts for the timing and magnitude of cash flows into and out of the investment.