A Demographer Wants to Measure Life Expectancy in Countries 1

question 32

Multiple Choice

A demographer wants to measure life expectancy in countries 1 and 2. Let µ₁ and µ₂ denote the mean life expectancy in countries 1 and 2, respectively. Specify the hypothesis to determine if life expectancy in country 1 is more than 10 years lower than in country 2.

• A) H₀: µ₁ - µ₂ ≤ 10, H_A: µ₁ - µ₂ > 10
• B) H₀: µ₁ - µ₂ ≥ 10, H_A: µ₁ - µ₂ < 10
• C) H₀: µ₁ - µ₂ ≤ -10, H_A: µ₁ - µ₂ > −10
• D) H₀: µ₁ - µ₂ ≥ -10, H_A: µ₁ - µ₂ < −10

Calculate and interpret the number of covariances needed for portfolio diversification in different market structures.

Understand the impact of macroeconomic and firm-specific events on security returns.

Recognize the limitations of diversification in reducing portfolio risk.

Distinguish between systematic and nonsystematic risk in the context of the single-index model and portfolio management.

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Definitions:

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Unethical

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Cause-and-Effect

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Conventional Pattern

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