In a Cross-Lagged Panel Design, Which Correlation Is Used to Infer

question 7

Multiple Choice

In a cross-lagged panel design, which correlation is used to infer a causal relationship?

• A) synchronous correlation
• B) causal correlation
• C) test-retest correlation
• D) cross-lagged correlation

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Definitions:

Market Risk

The potential for a loss faced by an investor, which is attributed to elements that influence the total performance of the financial markets.

Firm-specific Risk

The portion of a company's risk that is attributable to its own operations and environment, as opposed to market-wide risk.

Risk-free Asset

An investment with a guaranteed return and no risk of financial loss, often exemplified by government bonds.

Adequately Diversified

A portfolio strategy minimizing risk by investing in a wide variety of assets, ensuring that the performance of one investment does not dramatically impact overall portfolio performance.