Which of the Following Statements Best Describes the Beta Term

question 40

Multiple Choice

Which of the following statements best describes the beta term used in the CAPM?

• A)It is the ratio of the covariance between excess market returns to the variance between excess share returns and excess market returns.
• B)It is the ratio of the covariance between excess share returns and excess market returns to the variance of excess market returns.
• C)It is the ratio of the variance between excess share returns and excess market returns to the variance of excess market returns.
• D)It is the ratio of the variance between excess share returns and excess market returns to the covariance of excess market returns.

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Definitions:

Inductive Argument

A form of reasoning in which the premises seek to supply strong evidence for (not absolute proof of) the truth of the conclusion.

False Conclusion

An incorrect result or ending reached through reasoning or argumentation.

Premises

Statements or ideas that form the basis for a reasonable conclusion or the starting point for a logical argument.

Conclusion Indicator

Words or phrases used in argumentation to signal that a conclusion is being drawn, such as "therefore" or "thus."