Which Statistical Technique Uses Analysis of Covariance Structures to Explain

question 3

Multiple Choice

Which statistical technique uses analysis of covariance structures to explain causality among constructs?

• A) Regression analysis
• B) Factor analysis
• C) Discriminant analysis
• D) MANOVA
• E) Structural equation modeling

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Definitions:

Expected Return

The anticipated profit or loss from an investment, taking into account the potential outcomes and their probabilities.

SMB Beta

A measure used in the evaluation of stocks, indicating a stock's sensitivity to movements in the small minus big (SMB) factor, part of the Fama-French three-factor model.

HML Beta

A measure of sensitivity to the HML (High Minus Low) factor, part of the Fama-French three-factor model, indicating how much a stock's return is affected by the value premium.

Risk Premium

The additional return expected on an investment for taking on higher risk compared to a risk-free asset.