For a Particular Share, a 1 Per Cent Change in the Market

question 8

Multiple Choice

For a particular share, a 1 per cent change in the market index generally leads to a return of less than 1 per cent on the company's share. What can be concluded about the value of beta (fi) ?

• A) fi > 1
• B) fi = - 1
• C) fi < 1
• D) fi = 1

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Definitions:

Negative Acquisition Differential

A situation where the fair value of net assets acquired in a business combination exceeds the purchase consideration, often leading to a bargain purchase gain.

Positive Goodwill

The excess of purchase price over the fair market value of a company's identifiable assets minus liabilities, reflecting the value of a company's brand, reputation, and other intangible assets.

Carrying Values

The recorded cost of an asset in a company's financial statements, minus any accumulated depreciation or amortization.

Proportionate Consolidation Method

An accounting technique used to combine a company's share of the assets, liabilities, income, and expenses of a jointly controlled entity on a line-by-line basis in its financial statements.