"Isn't the ABAB Design Pretty Much a Case Study?" Asks

question 213

Multiple Choice

"Isn't the ABAB design pretty much a case study?" asks a student. The BEST answer would be:

• A) "Yes."
• B) "They're similar, but the ABAB design has greater internal validity."
• C) "They're similar, but the ABAB design has greater external validity."
• D) "They're not very similar, and the ABAB design has greater internal validity and greater external validity."

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Definitions:

Tobin's Separation Property

A principle in investment theory that suggests the investment decision can be separated from the financing decision, primarily developed by James Tobin.

Risk Aversion

The inclination to avoid taking risks, preferring safety over potential higher returns.

Optimal Risky Portfolio

A portfolio that offers the highest expected return for a given level of risk.

Systematic Variance

The portion of a security's return variance that is attributable to macroeconomic factors and cannot be diversified away.