Suppose That We Have Identified Three Important Systematic Risk Factors

question 29

Multiple Choice

Suppose that we have identified three important systematic risk factors given by exports,inflation,and industrial production. In the beginning of the year,growth in these three factors is estimated at -1%,2.5%,and 3.5% respectively. However,actual growth in these factors turns out to be 1%,-2%,and 2%. The factor betas are given by β_EX = 1.8,β_I = 0.7,and β_IP = 1.0. Calculate the stock's total return if the company announces that they had an industrial accident and the operating facilities will close down for some time thus resulting in a loss by the company of 7% in return.

• A) -4.05%
• B) -2.05%
• C) 4.55%
• D) 0.40%
• E) 1.85%

Grasp the significance of pilot testing and its role in refining research methods.

Differentiate between internal consistency, test-retest stability, and inter-observational reliability.

Acknowledge the importance of generalizability in research through repeated studies across different populations.

Comprehend the strategies for minimizing measurement errors and improving research accuracy.

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Definitions:

Frequency Polygon

A graphical representation of the distribution of numerical data. It is a line graph of class frequencies plotted against mid-point values.

Normal Distribution

A bell-shaped distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence.

Outliers

Data points that significantly differ from other observations in a dataset, potentially indicating a measurement error or a different underlying process.

Central Tendency

A statistical measure that identifies a single value as representative of an entire distribution of data, aiming to provide a description of the set’s overall behavior.