17. Narrow bracketing of investments in a portfolio of risk assets can lead to which of the following except:     a. Excess exposure to risk.     b. Optimal exposure to risk.   c. No risk in the portfolio.

International Financial Management
14th Edition
ISBN:9780357130698
Author:Madura
Publisher:Madura
Chapter8: Relationships Among Inflation, Interest Rates, And Exchange Rates
Section: Chapter Questions
Problem 2SBD
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17. Narrow bracketing of investments in a portfolio of risk assets can lead to which of the following except:  

 

a. Excess exposure to risk.  

 

b. Optimal exposure to risk.

 

c. No risk in the portfolio.

 

.

 

19. Sally is asked 10 questions and is told to give her answer in intervals such that 5% of the time the correct answer fell above the interval and 5% of the time the answer fell below the interval. The experimenter concludes that Sally is calibrated. For how many questions did the true answer fall within Sally’s given intervals?

 

a. 9   

 

b. 10

 

c. 8

 

.

 

20 Sally is asked 10 questions and is told to give her answer in intervals such that 20% of the time the correct answer fell above the interval and 20% of the time the answer fell below the interval. The experimenter concludes that Sally is under-confident. For how many questions did the true answer fall within Sally’s given intervals?  

 

a. 3

 

b. 5   

 

c. 7

 

.

 

21. I have spun the roulette wheel 5 times in a row and each time I have landed on red. Which of the following statements reflects the “law of small numbers”?  

 

a. Since red has occurred the last 5 times, then the roulette wheel is a on a “red streak” and red will most likely occur again.   

 

b. Since red has occurred the last 5 times, then black is “overdue” and surely the next spin will result in black.

 

c. The probability of black occurring is the same regardless of the

 

.

 

25. Under which of the six editing tasks will an individual classify outcomes as gains or losses?

 

a. Classification.   

 

b. Cancellation.

 

c. Coding.

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