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What Is the Potential Shortcoming of Using a Strict Cutoff

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What is the potential shortcoming of using a strict cutoff to determine statistical significance? Explain.


Definitions:

CAPM

A financial theory that calculates the expected return on an investment based on its risk relative to the market as a whole.

Expected Rate

The anticipated return on an investment, considering potential risks and historical returns.

Security's Beta

A measure of a security's volatility in relation to the overall market, indicating the risk associated with the investment.

Security Market Line

A graphical representation that shows the expected return of an asset at different levels of systematic, or market, risk.

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