Ayelet Is Trying to Draw a Picture of Two People

question 110

Multiple Choice

Ayelet is trying to draw a picture of two people down the street from each other.No matter how carefully she tries to draw them both the same size,the person who is supposed to be farther away appears much taller than the nearer person.You could explain that the depth cue of ________ size means that she will need to draw a ________ image of the person who is supposed to be farther away.

• A) relative;smaller
• B) relative;larger
• C) familiar;larger
• D) familiar;smaller

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Definitions:

Beta

A measure of a security's volatility in relation to the market, indicating its relative riskiness.

Arbitrage Pricing Theory

A theory that describes how the price of assets or securities is determined through the relationship to several risk factors or theoretical market indices.

Stephen Ross

An influential economist and finance professor known for his work in developing the Arbitrage Pricing Theory and other significant contributions to finance.

Security Market Line

A graphical representation of the expected return of investments as a function of their risk, depicting the relationship between the risk and the expected return of the market.