Beta Is a Better Risk Measure Than Standard Deviation When

question 82

Multiple Choice

Beta is a better risk measure than standard deviation when the firm:

• A) is effectively diversified.
• B) focused on total risk.
• C) uses the CAPM in its cost of capital calculation.
• D) has a beta that is close to 1.0.

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Definitions:

Neutral Conductor

A conductor that carries current back to the source in electrical systems and is at a potential of zero volts.

Sequence

An ordered collection of objects or events that follow a specific pattern or arrangement.

Harmonic

A sinusoidal component of a periodic wave or quantity having a frequency that is an integral multiple of the fundamental frequency.

True-RMS

A measurement of an alternating current or voltage, representing the square root of the average of the squares of the instantaneous values.