One Technical Problem That Arose with the Early Use of Intelligence

question 5

Multiple Choice

One technical problem that arose with the early use of intelligence quotients on tests such as the Stanford-Binet was that

• A) mental age was difficult to accurately determine.
• B) standard deviations were not constant with age.
• C) factor analytic techniques were in their infancy and tended to be inaccurate.
• D) None of these

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Definitions:

Discount Rate

The interest rate used to discount future cash flows to their present values, often used in investment appraisal and risk assessment.

Duration

The measure of the sensitivity of the price of a bond or other debt instrument to changes in interest rates, often expressed in years.

Coupon Bond

A type of bond that pays the holder interest payments at fixed intervals (usually annually or semi-annually) until the bond matures, at which point the principal amount is repaid.

Interest-Rate Risk

The potential for investment losses that result from a change in interest rates, affecting the value of fixed-income securities inversely.