If the portfolio variance were equal to zero, the amount of risk would be
a. unity. b. a positive number greater than 1.
c. negative always. d. zero.
Q. 2Fitting a model too closely to sample data, resulting in a model that does not accurately reflect the population is termed as
a. approximation. b. hypothesizing.
c. overfitting. d. postulating.
Q. 3The portfolio variance is the
a. sum of the squares of the deviations from the mean value under each scenario.
b. average of the sum of the squares of the deviations from the mean value under each investment scenario.
c. average of the product of the squares of the deviations from the mean value under each scenario.
d. average of the sum of the deviations from the mean value under each investment scenario.
Q. 4_____________ refers to the scenario in which the relationship between the dependent variable and one independent variable is different at different values of a second independent variable.
a. Interaction b. Multicollinearity
c. Autocorrelation d. Covariance
Q. 5The measure of risk most often associated with the Markowitz portfolio model is the
a. expected return of the portfolio.
b. annual interest on the portfolio.
c. variance of the portfolio's return.
d. number of investments listed in the portfolio.
Q. 6The prespecified value of the independent variable at which its relationship with the dependent variable changes in a piecewise linear regression model is referred to as the
a. milestone. b. knot.
c. tipping point. d. watchpoint.
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