10-54 If a Stock Portfolio Replicates the Returns on a Stock

question 2

Multiple Choice

10-54 If a stock portfolio replicates the returns on a stock market index,the beta of the portfolio will be

• A)less than 1.
• B)greater than 1.
• C)equal to 0.
• D)equal to 1.
• E)negative.

Understand the meaning and implications of positive and negative correlations.

Interpret the statistical significance and its impact on correlation analysis.

Recognize the limitations of correlation coefficients, especially in implying causation.

Apply correlation coefficients in practical research scenarios, understanding their role in reliability and prediction.

---

Definitions:

Intelligence Test

A standardized assessment designed to measure cognitive abilities, including reasoning, problem-solving, and understanding, to derive an intelligence quotient (IQ).

Simon and Binet

Alfred Binet and Theodore Simon, French psychologists who developed the first intelligence test in the early 20th century to identify students needing special education.

Mental Age

A measure of an individual's mental proficiency expressed in terms of the average age at which a normal individual reaches the same level of proficiency.

IQ

A measure of an individual's intellectual abilities in relation to others, often calculated through standardized tests.