Randomization Plays a Significant Part in Experimental Research

question 6

Multiple Choice

Randomization plays a significant part in experimental research. Experiments potentially control for many threats to the _____ but researchers must remain aware of these threats. The central features of the classical experiment are independent and dependent variables, pretesting and post-testing, and experimental and control groups created through random assignment.

• A) reliability of causal inference
• B) validity of affirming inference
• C) validity of causal inference
• D) validity of experimental inference

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Definitions:

Risk-Free Profits

Profits made through investment strategies that are supposed to incur no risk to the investor.

Interest Rate Parity

A financial theory stating that the difference in interest rates between two countries will be offset by changes in the exchange rate between their currencies.

Covered Interest Arbitrage

The practice of exploiting the interest rate differential between two countries while hedging against exchange rate risk using forward contracts.

Portfolio's Beta

A measurement that indicates the volatility, or systematic risk, of a portfolio relative to the overall market.