“Multicollinearity exists when the dependent variable and the independent variable are highly correlated.” Do you agree? Explain.

Q: Define Sharpe’s reward to variability ratio

A: Answer: Nobel Laureate William Sharpe developed a risk-adjusted efficiency indicator for mutual…

Q: What is the put-call ratio? What is it used for? What are considered high and low values and what do…

A: The question is based on the concept for indicators of the stock market performance. The Put-Call…

Q: Describe the Sensitivity Analysis for Mutually Exclusive Alternatives?

A: Sensitivity analysis portrays how various values of an independent factor under a given arrangement…

Q: Explain positively correlated

A: Positive correlation: It's a connection between two factors that move the two factors pair — that…

Q: Explain noncumulative pari passu distribution?

A: Pari passu refers to equal footing in Latin. It is the situation where all the stakeholders of the…

Q: Describe the method for conducting sensitivity analysis for mutually exclusive alternatives?

A: Sensitivity analysis is a financial model that decides how target factors are influenced by changes…

Q: What is the difference between covariance and correlation?

A: Co-variance: A co-variance is nothing but a descriptive measure of linear interaction intensity…

Q: Which of the following statements are true? A. The lower the M-squared the better. B. The higher…

A: higher the sharpe ratio , the better the portfolio is. higher the treynor ratio, the better the…

Q: Is an higher NPV better than a lower NPV and why?

A: The net present value is the difference between sums of the present value of cash inflows and…

Q: A variable which can assume any value within a given range is a. Discrete variable O b. Quantitative…

A:

Q: What is the difference between I and G spread measures?

A: The yield spread of the bond reflects the difference between the YTM(Yield to Maturity) of various…

Q: Why is Quick Ratio deemed a better measure than the two other measures? Explain:

A: Quick ratio is used for measuring the short term liquidity position of the company and forms a part…

Q: Which method would be more consistent with the matching principle? Why?

A: Definition:

Q: Explain the coefficient of variation?a

A: The coefficient of variation (CV) may be a statistical measure of the scattering of information that…

Q: Does the IRR analysis yield the results consistent with PW and other equivalence methods?

A: Yes, the IRR analysis gives the results consistent with PW analysis and Equivalence methods.

Q: variable(s) that are qualitative

A: Qualitative variable is a variable that varies with volume of activity which cannot be quantified in…

Q: coefficient of correlation is used to obtain what?

A: The correlation coefficient could be a measurable degree of the quality of the connection between…

Q: Explain Key Statistical Relationships between Covariance and Correlation of Returns?

A: Covariance:It is defined as the statistical relationship between stock prices of stock that vary…

Q: Give an example of a Sensitivity Analysis performed for Mutually Exclusive Alternatives?

A: Mutually exclusive alternatives are those alternatives out of which only one can be selected at a…

Q: What is the relationship between the B/C ratio and the PW criterion?

A: The question is based on the concept of benefit to cost ratio analysis and present worth criteria…

Q: Which of the following statement is true of a covariance matrix?  a. The diagonal values are…

A: A covariance matrix is a representation of variances and covariances between assets. Hence, a n × n…

Q: what is single index model?

A: Single index model refers to the asset pricing model that can be used to measure the risk and return…

Q: What are some examples of variable consideration? What are the two approaches for estimating…

A: Variable consideration: It is an amount which is included in the contract as consideration. An…

Q: What is a cross rate?

A: Cross rate is an exchange rate of currency between two countries, but both countries are not using…

Q: Unlevered Beta is ? How it can be calculated?

A: Unlevered Beta: Unlevered beta is the beta of the firm without the impact of leverage or debt…

Q: What was the correlation between both return series?

A: Answer: Introduction: A linear correlation measure between two variables that is, An independent of…

Q: When two variables are not perfectly related, then their correlation would be one?   a.true…

A: In order to determine the relationship between the variables correlation is used, if in changing in…

Q: Discuss the main difference between the single-index model and the Markowitz optimization model.

A: Single Index Model- This article is concerning the quality rating model in political economy. For an…

Q: The coefficient of variation is useful in determing the relative degree of variability of different…

A: In finance, the coefficient of variation is a statistical measure that is used for determining the…

Q: Explain Variation on the Preferred IRR and IRR Lookback?

A: The internal rate of return (IRR) is the measure used in the financial analysis of an investment…

Q: Which of the following is not an example of external variable?

A: Option a

Q: t is objective?...

A: Objective vs subjective trading: Most traders follow either an essentially objective or subjective…

Q: What are the two major types of tests that have been performed totest the validity of the CAPM?…

A: Two major types of tests performed for the validity of CAPM : 1. Black, Jensen and scholes test,…

Q: a. Are there Nash equilibria? If so, determine how many and state which strategies.

A: Yes, there are Nash equilibrium.

Q: the formula for the correlation statistic is?

A: Correlation: Correlation is a statistical method that can display whether and just how strongly…

Q: The correlation of two variables will be Group of answer choices a. Between -1 and +1, inclusive b.…

A: The correlation coefficient is a statistical measure.

Q: Does it matter which beta is used, and if so, whichis best?

A: Beta value: It is the ratio of the volatility of a stock to that of the reference index. For Beta…