How Differently Is the Independent Variable Handled in Studies with an Experimental

question 15

Multiple Choice

How differently is the independent variable handled in studies with an experimental design or a quasi-experimental design?

• A) An independent variable is not identified or needed in a quasi-experimental design.
• B) Both designs identify an independent variable, and both manipulate the independent variable.
• C) Experimental designs demonstrate that the independent variable is related to the outcome, but quasi-experimental studies allow for independent variables that stand alone.
• D) Although both designs identify an independent variable, experimental designs identify it before the research is initiated, and quasi-experimental designs identify it after the data have been analyzed.

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Definitions:

Market Risk Premium

The additional return investors expect to receive from an equity investment over the risk-free rate, compensating for taking on higher risk.

Negative Beta

A measure indicating the inverse relationship between the return of a stock and the return of the overall market.

SML

Security Market Line, a graphical representation of the Capital Asset Pricing Model (CAPM) showing the relationship between the expected return of a security and its risk.

CAPM

Short for Capital Asset Pricing Model, a financial model that describes the relationship between systematic risk and expected return for assets.