One Asset Has a Beta of 1

question 69

Multiple Choice

One asset has a beta of 1.5 and another asset has a beta of 0.75.The difference in beta means that the asset with a beta of 0.75 has

• A)75 percent less nondiversifiable risk than the asset with a beta of 1.5.
• B)75 percent more nondiversifiable risk than the asset with a beta of 1.5.
• C)twice as much nondiversifiable risk as the asset with a beta of 1.5.
• D)one-half as much nondiversifiable risk as the asset with a beta of 1.5.

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Definitions:

Accounts Receivable Turnover

A financial ratio indicating how quickly a company collects cash from credit sales.

Current Ratio

A financial ratio indicating a firm's capacity to cover its short-term liabilities with its current assets.

Financial Data

Information about financial transactions, including revenues, expenses, assets, and liabilities, used to analyze the financial health of a business.

Acid-Test Ratio

A liquidity ratio that measures a company's ability to pay off its current liabilities with quick assets, excluding inventory.