Which of the Following Statement Best Describes the Criteria for Inferring

question 25

Multiple Choice

Which of the following statement best describes the criteria for inferring or causality?​

• A) ​A relationship must exist between variables.
• B) One variable must precede the other in time.​
• C) A third variable did not cause the changes observed in the first two variables.​
• D) A relationship must exist between two variables, with the cause preceding the effect in time, and the relationship cannot be explained away by the influence of a third variable.​

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Definitions:

Standard Deviation

A statistical measure of the dispersion of returns for a given security or market index.

Risk Premium

Risk premium is the additional return an investor demands for holding a risky asset over a risk-free asset, compensating for the higher uncertainty.

Risk Premium

The extra return demanded by investors for taking on additional risk above the risk-free rate of return.

Asset Return

The income that an asset produces for its investor, measured as a percentage of the asset's purchase price.