A Screening Test Has a Specificity of 92

question 8

Multiple Choice

A screening test has a specificity of 92%.This means that there is a(n)

• A) 92% chance of a true positive.
• B) 92% chance of a false positive.
• C) 8% chance of a false positive.
• D) 8% chance of a true positive.

Understand the concepts of the security market line (SML), beta, and their significance in portfolio management.

Comprehend the arbitrage pricing theory (APT) and its application in finance.

Identify factors that influence asset returns and how they are measured and evaluated.

Apply the concept of the expected return to assess potential investment outcomes.

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Definitions:

Compensating Balance

A minimum balance that a borrower must maintain in a bank account as a condition for getting a loan from that bank.

Cash Burn

The rate at which a company spends its cash reserves, especially in the context of startups or new ventures.

Monthly Cash Expenses

The total amount of money spent by a business within a month for operational activities, excluding non-cash expenses.

Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value due to changes in interest rates.