Milton Has Been Mildly Depressed for Many Years

question 54

Multiple Choice

Milton has been mildly depressed for many years. Just recently, however, his depression deepened, and he was severely depressed for about three months. His deep depression then lifted and he was once again mildly depressed. Milton

• A) will be easier to treat now that the severe depression is resolved.
• B) will quickly respond to treatment and will recover completely from his depression.
• C) will require a longer and more intense course of treatment to maintain a normal mood state.
• D) will require treatment for the rest of his life.

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Definitions:

Historical Beta

A measure of a stock's volatility in relation to the market, based on past performance.

Beta

A measure of the volatility, or systemic risk, of a security or a portfolio in comparison to the market as a whole; it indicates the tendency of a security's returns to respond to swings in the market.

CAPM (Capital Asset Pricing Model)

A model used to determine the expected return on an investment based on its level of risk, as well as the risk-free rate of return and the expected market return.

Risk Premium

The extra return expected by an investor for holding a risky asset compared to a risk-free asset, as compensation for the higher risk.