Theory B Predicts That Everything That Happens,happens for a Reason

question 38

Multiple Choice

Theory B predicts that everything that happens,happens for a reason - although we may not know what the reason is.This theory

• A) can be refuted.
• B) probably cannot be refuted.
• C) is a good explanation for what happens.
• D) is the kind of theory that scientists like to build because it can explain so much.

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Definitions:

Covariances

An indicator of the extent to which two variables fluctuate in tandem.

Risky Securities

Financial instruments carrying a higher potential for loss, often offering greater potential returns to compensate for the increased risk.

Portfolio Variance

A measure of the dispersion of returns of a portfolio, calculated as the weighted average of the covariance of each asset in the portfolio.

Coefficient of Correlation

A statistical measure that indicates the degree to which two variables move in relation to each other, ranging from -1 to 1.