When screening for potential equity investments, if two of the criteria are dependent, what are the possible effects?
a. a decrease in the number of stocks that pass the screen
b. an increase in the number of stocks that pass the screen
c. can't predict the effect
I chose c because I don't know what the filter would do, intrinsically increase the stocks that pass or decrease it. The answer provided simply gives the example that when one stock passes the first criterion, it is more likely to pass the second. This makes total sense. On the flip side, if the stock does not pass the first criterion it is less likely to pass the second. Anyway, without a better description as to the effect of the filter, how can you chose between a or b? Is it because a 'filter' is generally considered to mean 'a comparison that allows you to decide if item passes through or not'? Seems like a question that hinges too much on language, don't you think?
