Which of the Following Would Be a Cause for Concern

question 14

Multiple Choice

Which of the following would be a cause for concern when assessing the validity of an employment test?

• A)The validity study was done on a somewhat small sample.
• B)The test correlates highly with other tests of known validity.
• C)The test was only validated on an all white, male population.
• D)There is great variability in both predictor and criterion.

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Definitions:

CAPM

The Capital Asset Pricing Model, a theory that describes the relationship between risk and expected return for assets, particularly stocks.

Exchange-Rate Risk

The potential for investors to experience losses due to changes in the exchange rate between two currencies in their foreign investment transactions.

World-Index Portfolio

An investment portfolio comprising a wide variety of assets that aim to mirror the performance of global financial markets or specific global indexes.

Single-Country Funds

Investment funds that target securities from a specific country, offering exposure to that nation’s economic performance.