Which Statistical Phenomenon Refers to the Tendency for Extraordinary or Unusual

question 66

Multiple Choice

Which statistical phenomenon refers to the tendency for extraordinary or unusual events to be followed by more ordinary events?

• A) the standard deviation
• B) the normal curve
• C) regression toward the mean
• D) illusory correlation

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Definitions:

Cost of Equity

The return a firm theoretically pays to its equity investors to compensate for the risk they undertake by investing in the company.

Cost of Debt Financing

The total expenses a company incurs in order to borrow money, including interest payments, transaction fees, and any other associated costs.

Business Risk

The exposure to factors that can lead to a reduction in the value of an investment or in the revenues of a business.

Systematic Risk

A risk that influences a large number of assets. Also called market risk.