The Assumption of Homogeneity of Variance Is Met When

question 28

Multiple Choice

The assumption of homogeneity of variance is met when:

• A)The variances in different groups are significantly different.
• B)The variance across groups is proportional to the means of those groups.
• C)The variance is the same as the interquartile range.
• D)The variances in different groups are approximately equal.

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Definitions:

Scatter Diagram

A graphical representation displaying the relationship or correlation between two numerical variables, with data points plotted on a horizontal and vertical axis.

Proxy Market Portfolio

A proxy market portfolio is a theoretical bundle of investments that represents a broad market segment, used in financial models to simulate the behavior of entire markets.

Security Market Line

A representation in financial theory that shows the relationship between risk and return for all securities in the capital markets.

Beta

A measure of the volatility, or systematic risk, of a security or a portfolio compared to the market as a whole.