Daphne Is Analyzing Data from a New Psychological Test

question 60

Multiple Choice

Daphne is analyzing data from a new psychological test. She is looking at all the correlations for all the various questions to determine whether there are some traits that seem to go together. Which of the following procedures is similar to Daphne's technique?

• A)analysis of variance
• B)covariance
• C)trend analysis
• D)factor analysis

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Definitions:

Risk-Free Rate

The projected gain from an investment without any risk, commonly exemplified by the returns on government bonds.

Market Proxy

A benchmark or index that represents the overall movement of the market, used for comparative analysis of an investment's performance.

CAPM

Capital Asset Pricing Model, a formula that describes the relationship between the expected return of an investment and its risk.

Risk-Adjusted Basis

A method of calculating returns or performance that accounts for the level of risk associated with an investment.