Which of the Following Statements Is True

question 55

Multiple Choice

Which of the following statements is true?

• A)One advantage of using MPT for loans is that the returns on individual loans are normally distributed, meaning that the upside returns are equal to the downside risks.
• B)One objection to using MPT for loans is that the returns on individual loans are not normally distributed, meaning that most loans have unlimited upside returns and long-tail downside risks.
• C)One advantage of using MPT for loans is that the returns on individual loans are normally distributed, meaning that most loans have unlimited upside returns and unlimited downside risks.
• D)One objection to using MPT for loans is that the returns on individual loans are not normally distributed, meaning that most loans have limited upside returns and long-tail downside risks.

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Definitions:

Prototype

An early sample, model, or release of a product that is used to test a concept or process or to act as a thing to be replicated or learned from.

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The belonging of an item or individual to a defined group based on shared characteristics or criteria.

Representativeness Heuristic

A mental shortcut used for making decisions about the likelihood of an uncertain event by comparing it to what is considered a normal instance.

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A progressive neurodegenerative disorder characterized by memory loss, cognitive decline, and personality changes, ultimately leading to severe impairment in daily functioning.