Theory B Predicts That Everything That Happens,happens for a Reason

question 38

Multiple Choice

Theory B predicts that everything that happens,happens for a reason - although we may not know what the reason is.This theory

• A) can be refuted.
• B) probably cannot be refuted.
• C) is a good explanation for what happens.
• D) is the kind of theory that scientists like to build because it can explain so much.

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Definitions:

Risk-Free Rate

The hypothetical return on a risk-free investment, typically illustrated by the interest earned on government securities.

Beta

A measure of a stock's volatility in relation to the overall market; a beta above 1 indicates the stock is more volatile than the market.

Expected Return

The average of all possible returns from an investment, weighted by their probabilities.

Market

A venue where goods, services, or financial instruments are exchanged between buyers and sellers, either physically or electronically.