Prediction Error During an Assessment Is More Likely When the

question 2

Multiple Choice

Prediction error during an assessment is more likely when the

• A) base rate of a behaviour is low.
• B) base rate of a behaviour is moderate.
• C) base rate of a behaviour is high.
• D) behaviour has been empirically investigated.

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Definitions:

Real Rate of Interest

The interest rate that has been adjusted to remove the effects of inflation to reflect the real cost of funds to the borrower and the real yield to the lender.

Holding-Period Return

The total return received from holding an asset or portfolio of assets over a period of time, typically expressed as a percentage.

Dividend

A payment made by a corporation to its shareholders, usually as a distribution of profits.

Nominal Rate of Interest

The rate of interest before adjustment for inflation, reflecting the rate at which money will grow over time without considering the purchasing power of that money.