Financial Management - Study Mode

[#916] Complex statistical and mathematical theory is an approach, which is classified as
Correct Answer

(A) arbitrage pricing theory

Explanation

Solution: Complex statistical and mathematical theory is an approach, which is classified as arbitrage pricing theory. Arbitrage pricing theory (APT) is a multi-factor asset pricing model based on the idea that an asset's returns can be predicted using the linear relationship between the asset’s expected return and a number of macroeconomic variables that capture systematic risk.

[#917] First step in determining an efficient portfolio is to consider
Correct Answer

(A) set of attainable portfolios

Explanation

Solution: First step in determining an efficient portfolio is to consider set of attainable portfolios. The feasible, or attainable, set represents all portfolios that can be constructed from a given set of stocks. This set is only efficient for part of its combinations. An efficient portfolio is that portfolio which provides the highest expected return for any degree of risk.

[#918] Tendency of people to blame failure on bad luck but given tribute of success to themselves is classified as
Correct Answer

(A) self-attribution bias

Explanation

Solution: Tendency of people to blame failure on bad luck but given tribute of success to themselves is classified as self-attribution bias. Self-attribution bias is a long-standing concept in psychology research and refers to individuals' tendency to attribute successes to personal skills and failures to factors beyond their control.

[#919] Stock portfolio with highest book to market ratios is considered as
Correct Answer

(A) H portfolio

Explanation

Solution: Stock portfolio with highest book to market ratios is considered as H portfolio.

[#920] High portfolio return is 6.5% and low portfolio return is 3.0% then HML portfolio will be
Correct Answer

(C) 3.50%

Explanation

Solution: HML Portfolio = High portfolio return - Low portfolio return = 6.5% - 3.00% = 3.5%.