Many Financial Instruments Are Standardized Because

question 37

Multiple Choice

Many financial instruments are standardized because:

• A) it is believed that most parties to a contract do not read them anyway.
• B) complexity is costly, the more complex a contract, the more it costs to create.
• C) the standardization of contracts makes them harder to understand.
• D) it is required by the government.

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Definitions:

Standard Error

A statistical concept that assesses how accurately a sample distribution reflects a population, utilizing standard deviation for this purpose.

Regression Analysis

A statistical method for modeling the relationship between a dependent variable and one or more independent variables.

Linear Parameters

The coefficients in linear models that represent the relationship between the independent variables and the dependent variable.

Normal Distribution

A probability distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean.