Dr Pearson and His Research Team Decide to Gather Data

question 9

Short Answer

Dr. Pearson and his research team decide to gather data from two local communities and compare the two. Their goal is to compare the communities to determine what gaps are present and to locate the best solutions to fill those gaps. Once the research is gathered, Dr. Pearson and the team will pitch a proposal to City Hall. Instead of looking at what each community is missing, Dr. Pearson instructs his team to make a list of all the benefits the community has. By listing the benefits of each community, the team will be able to see what improvements are needed. Each community has a homeless shelter, a large family/kid-friendly park, schools, and bike paths. However, the research team notes that each community lacks bus stops. Based on this scenario, what is this method called?

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Definitions:

Jensen's Measure

A performance metric that evaluates the excess return of an investment portfolio over the predicted return by the Capital Asset Pricing Model (CAPM), adjusted for market risk.

Market Portfolio

A hypothetical collection of all market assets, each proportioned by its market value.

Betas

An evaluation measure for the volatility or inherent risk present in a security or portfolio in comparison to the total market.