Pooling arrangments are only effective when the losses are independent and uncorrelated.
When losses are uncorrelated there is a relatively high probability that unexpectedly high losses experienced by one person will be offset by the unexpectedly low losses of other participants, therefore, the average losses are predictable. However, when they are positively correlated there is a higher probability that if there is a loss for one person there will be losses for more participants (same goes for the probability of not having a loss).
The answer is b) False
Pooling is effective when the losses in a group are correlated. O True ○ False
Sketch the probability distribution for average losses in a pooling arrangement for: The expected loss for each participant is $1,500, and losses for the 100 participants are independent The expected loss for each participant is $1,500, and losses for the 100 participants are positively correlated
True of False: We would expect the performance of Ford and GM to be negatively correlated.
Diversification is most effective when security returns are _________. A. negatively correlated B. uncorrelated C. positively correlated D. high Please explain why
3. (2 points) Diversification is most effective when security returns are_ a high b. negatively correlated positively correlated d uncorrelated Asset Pricing (18 points) 4. (3 points) Suppose the CAPM holds and you have the following information on different assets Asset Systematie Risk Firm-specific Risk A 0.12 0.11 0.11 0.10 0.14 0.17 Which one of the following is true? a. Asset A has the largest beta b. Asset B has the largest beta
True or false: The standard deviation is resistant to outliers. O False True True or false: When summarizing the distribution of a dataset with a strong outlier, the five-number summary is a better choice than the mean and standard deviation. O False True
Na and K' are isoelectronic O True O False When a neutral atom is converted to a cation, its atomic radius will increase. O True ○ False the nk aliner eparth miethal.halogen wil have a greater electron afliniy than O True ○ False
True or False 15. A portfolio consisting of securities that are highly correlated is well diversified. 16.The expected return on an investment includes both the expected of income plus expected price appreciation. 17.The capital asset pricing model specifies the required return adjusted for systemic risk.
True or false and explain why it is true or false Most effective team leaders are NOT good followers. A good relationship is very helpful when seeking cooperation from other departments. Good team players willing execute organizational changes even when they disagree with them. Some disagreement and conflict may actually be beneficial to teams. Bill Russell, the former basketball player, thinks that teams function better under democratically, participative leaders. Most good team leaders were also good team members.
Question 21 (1 point) True or false: A positive effective tax rate occurs when when refundable tax credits exceed an individual's tax liability. True False Question 22 (1 point) ---- is a nonrefundable tax credit that college graduates can use to help offset the cost of taking classes at an accredited institution to further their careers. The Secure Credit American Opportunity Tax Credit Earners Credit Lifetime Learning Credit
True or false: When a phosphate group from ATP is transferred to a molecule, it stops energy from being transferred. Now, work cannot be done.