Part 1 (all questions 5 points)
Q.1 The “Value” factor belongs to which of the following category of factors?
A. Macroeconomic Factors
B. Statistical Factors
C. Fundamental Factors
Answer: C
Explanation: The Value factor belongs to the class of fundamental factors as it is based on
the B...
MGT – 6203: Homework 3
100 points: Part 1 (60 points Quiz) + Part 2 (40 points Peer-Corrected)
Part 1 (all questions 5 points)
Q.1 The “Value” factor belongs to which of the following category of factors?
A. Macroeconomic Factors
B. Statistical Factors
C. Fundamental Factors
Answer: C
Explanation: The Value factor belongs to the class of fundamental factors as it is based on
the Book to Market ratio.
*Q.2 In Factor Regression, what does the intercept tell us?
A. Fund’s excess return above the risk free rate
B. Fund manager’s performance
C. Quantifies the risk of the fund
D. The traditional market beta
Answer: C
Explanation: Alpha is unexplained return, this is the return generated by timing the market
or fund manager’s outperformance.
Q.3 Which of the following statements is correct with respect to Bounce Rate?
A. Bounce Rate gives an indication of the proportion of visitors who did not interact
with the website.
B. Bounce Rate tells us how long, on average, visitors are staying on our website.
C. Bounce Rate increases when someone loads a page and decreases after 30 minutes
of inactivity.
D. A high Bounce Rate generally indicates that the website entrance pages are very
relevant to the website’s visitors.
Answer: A
Explanation: Statement A is correct.
B) Average Session Duration defines how long, on average, visitors are staying on the
website.
C) A session starts right away when someone loads a page and ends after 30 minutes of
inactivity.
, D) A high Bounce Rate generally indicates that the website entrance pages are not relevant
to the website’s visitors.
Q.4 In which scenario will you not be able to run a successful A/B test on a landing page of a
website?
A. Changing website’s background color to attract more visitors, with all else unchanged
B. Enlarging the website’s sign-up button to increase the new leads, with all else
unchanged
C. Redesigning the whole website at once, including logos, images, background color,
headings and button designs
D. In all cases above, the website can be improved through A/B testing
Answer: C
Explanation: In A/B testing, one needs a clear control(A) and test(B). In A, the difference
between test and control is background color. B is sign-up button. C is testing too many
elements at the same time, no clear control and test, and makes it hard to improve website
from the statistical results. C can use multivariate testing instead.
It is important to consider that option C is the only one where a clear vision has not been
defined, apart from the fact that multiple elements are being tested at the same time, which
is a pre-requisite of A/B testing. While redesigning the whole website could be considered as
the control, we have not been given why exactly is it being done. The following explains why
testing too many elements may cause discrepancies:
Industry experts caution against running too many tests at the same time. Testing too many
elements of a website together makes it difficult to pinpoint which element influenced the
success or failure of the test most. Apart from this, more the elements tested, more needs to be
the traffic on that page to justify statistically significant testing. Thus, prioritization of tests is
indispensable for successful A/B testing.
(Source: https://vwo.com/ab-testing/)
Q.5 The objective of Conversion Rate Optimization (CRO) is to:
A. Increase number of website visitors
B. Increase website sales
C. Enhance engagement
D. All the above
Answer: D
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