One of the Disadvantages of the Correlational Method Is That

question 383

Multiple Choice

One of the disadvantages of the correlational method is that

• A) correlations may be weak.
• B) correlations may be negative or zero.
• C) it can only be used in laboratory settings.
• D) the relationships observed between variables may be caused by some unknown third factor.

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Definitions:

Portfolio Weight

The proportion of a specific asset within an investment portfolio relative to the total asset value of the portfolio.

Beta

A measure of a stock's volatility in comparison to the overall market, indicating its relative risk.

Economic Probabilities

The likelihood of various economic outcomes occurring, based on assumptions about market and economic conditions.

Expected Return

The anticipated return on an investment over a specified period, integrating all possible outcomes.