Increasing the Sample Size Reduces the Magnitude, or Risk, of All

question 9

Multiple Choice

Increasing the sample size reduces the magnitude, or risk, of all of the following except which one?

• A) Bias
• B) Noise
• C) Sampling error
• D) Type II error

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Definitions:

Strong-Form EMH

A theory in financial economics that states all information, public and private, is fully reflected in stock prices, implying no one can consistently achieve higher returns.

Active Management

An investment strategy where a manager makes specific investments with the goal of outperforming an investment benchmark index.

Security Analysis

The evaluation of financial instruments (such as stocks, bonds) to determine their value and potential for return on investment.

Index Fund

A collective investment scheme designed to follow certain preset rules so that the fund can track a specified basket of underlying investments.