What Is the Optimal Item-Difficulty Level for a True-False Item

question 34

Multiple Choice

What is the optimal item-difficulty level for a true-false item?

• A) .500
• B) .625
• C) .755
• D) 1.000

---

Definitions:

Security Market Line

A representation in financial markets showing the relationship between risk and return for individual securities.

Expected Inflation Rate

The anticipated rate at which the general level of prices for goods and services will rise over a certain period of time.

Required Returns

The minimum return an investor expects to achieve by investing in a particular asset, taking into account its risk level.

Market Risk Premium

The difference between the expected return on a market portfolio and the risk-free rate.