Exhibit 10.1 the Following Questions Are Based on the Problem Description and Description

question 69

Multiple Choice

Exhibit 10.1
The following questions are based on the problem description and the output below.
A college admissions officer wants to evaluate graduate school applicants based on their GMAT scores, verbal and quantitative. Students are classified as either successful or not-successful in their graduate studies. The officer has data on 20 current students, ten of whom are doing very well (Group 1) and ten who are not (Group 2) . ​ ​ ​ ​
-Refer to Exhibit 10.1. What number of observations is classified incorrectly?

• A) 3
• B) 9
• C) 17
• D) 20

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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.