Use the following three statements to answer this question: I. Beta is constant over time. II....
Use the following three statements to answer this question:
I. Beta is constant over time.
II. Empirically beta is never negative.
III. Negative beta implies a negative standard deviation.
|
I, II and III are correct. |
|
I, II and III are incorrect. |
|
I is correct, II and III are incorrect. |
|
I, II are incorrect, III is correct. |
Homework Answers
I, II and III are incorrect
I is incorrect because beta is not constant, but changes over time.
II is incorrect because beta has been observed to be negative in some cases.
III is incorrect because standard deviation is an absolute measure and can never be negative
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Use the following three statements to answer this question:
I. Beta is constant over time.
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Need help with this question:
Use the following three statements to answer this question:
I. The CAPM points out that rational investors should be
compensated for unique risk.
II. The CAPM implies that non-systematic risk is the appropriate
measure of risk to determine the risk premium required by investors
for holding a risky security.
III. The expected return from non-systematic risk is
zero.
a
I, II and III are correct.
b
I and II are incorrect, III is correct.
c...
Which of the following statements is/are INCORRECT? I. Beta measures a security's market risk, also known as systematic risk. II. SML is a graphical depiction of WACC model. III. If investors become more risk averse, the slope of SML will increase accordingly. IV. Other things being equal, a security's required rate of return doubles when its beta value doubles. V. Diversification will normally reduce the riskiness of a portfolio of securities. VI. Federal Reserve cuts an interest rate is considered...
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