A Person Suffering from Anxiety Predicts That He Will Make

question 832

Multiple Choice

A person suffering from anxiety predicts that he will make a fool of himself at a social gathering and, in fact, he does.A psychologist predicts that students in his morning class will outperform those in his afternoon class and, in fact, they do.What do the anxious person and the psychologist have in common? They both

• A) are engaged in the Barnum effect.
• B) produced a self-fulfilling prophecy.
• C) are engaged in the placebo effect.
• D) possess a precognition type of ESP.

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Definitions:

Sharpe Measure

A metric used to assess the performance of an investment by adjusting for its risk.

Excess Returns

Returns earned by an asset that exceed the risk-free rate of return, indicating the additional gain from taking on risk.

Risk-free Asset

A financial instrument that is considered to have no risk of financial loss, typically issued by a government.

Sharpe Measure

A method to evaluate the risk-adjusted return of an investment, comparing portfolio excess return to the standard deviation of the portfolio.