A Multiple Choice Exam Offers Four Choices for Each Question

question 23

Multiple Choice

A multiple choice exam offers four choices for each question. Paul just guesses the answers, so he has probability 1/4 of getting any one answer right.
Paul's guess on any one question gives no information about his guess on any other question. The statistical term for this is

• A) absence of bias.
• B) absence of confounding.
• C) law of large numbers.
• D) independence.
• E) expected value.

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Definitions:

Insiders

Individuals within a corporation who have access to private, non-public information which might influence the company's stock price.

Small-Firm Anomaly

The historical observation that smaller firms, or those with a lower market capitalization, tend to outperform larger companies on a risk-adjusted basis.

January Effect

A seasonal increase in stock prices that often occurs in January after the sell-off for tax purposes in December.

Neglected

In financial contexts, this refers to assets or securities that are underfollowed or overlooked by investors and analysts.