A Standard Determined in Terms of the Business Judgment of Reasonable

question 68

Multiple Choice

A standard determined in terms of the business judgment of reasonable persons familiar with the practices customary in the type of transaction involved and in terms of the facts and circumstances of the case is:

• A) good faith.
• B) a subjective standard.
• C) commercial reasonableness.
• D) None of these.

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Definitions:

Single Index Model

A simplified financial model that describes the return of a security as a linear function of the return of a market index, plus some idiosyncratic noise.

Well-Diversified Portfolio

A collection of investment assets reduced in risk through spreading investments across various securities, sectors, or asset classes.

Single Index Model

A simplification of market models that uses a single factor (usually a market index) to model all securities' returns.

Standard Deviation

A statistical measure representing the dispersion or variability of a set of data points, widely used in finance to quantify the risk associated with a particular investment or portfolio.