Which of the Following Is an Example of a Hidden

question 111

Multiple Choice

Which of the following is an example of a hidden characteristic?

• A) After purchasing life insurance, Billy joins the bomb squad.
• B) Only the owner knows about her car defects.
• C) Bobby let his employer know about his college degree.
• D) Sally provides her driving record to the car insurance company.

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Definitions:

Sharpe Measure

A metric used to assess the performance of an investment by adjusting for its risk, calculated as the difference between the investment's returns and the risk-free return rate, divided by the investment's standard deviation.

Beta

An index for assessing the variation or inherent risk of a security or a portfolio as compared to the aggregate market.

Sharpe Measure

A metric used to evaluate the risk-adjusted return of an investment, calculating the difference between the returns of the investment and the risk-free rate, divided by the standard deviation of the investment’s returns.

Beta

A criterion for quantifying the instability or systematic risk of a security or a portfolio in contrast to the market as a whole.