Figure 27-4 -Which of the Following Is a Source of Market Risk

question 33

Multiple Choice

Figure 27-4
-Which of the following is a source of market risk?

• A)Holding stocks in many companies carries the risk of a reduced average return.
• B)Real GDP varies over time and sales and profits move with real GDP.
• C)When a paper producer has declining sales, it is likely that so will other paper producers.
• D)If stockholders become aggravated with the way a CEO runs a company, the price of that company's stock might fall in the stock market.

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Definitions:

Analysis of Variance

A statistical method used to compare the means of three or more samples to determine if at least one of them is significantly different from the others.

Dummy Variable

A binary variable used in regression analyses to represent categories of a nominal variable.

Slope Coefficient

In linear regression, it represents the expected change in the dependent variable for a one-unit change in the independent variable.

Dummy Variables

Variables created to represent attributes with two or more distinct categories or levels, used in regression analysis.