The Expected Impact of Unanticipated Macroeconomic Events on a Security's

question 18

Multiple Choice

The expected impact of unanticipated macroeconomic events on a security's return during the period is

• A)included in the security's expected return.
• B)zero.
• C)equal to the risk-free rate.
• D)proportional to the firm's beta.

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Definitions:

Medulla

A section of the brainstem involved in autonomic functions, such as breathing and heart rate.

Cerebellum

A region of the brain that plays an important role in motor control and may also be involved in some cognitive functions such as attention and language.

Diathesis-Stress Model

Model that asserts that only when a diathesis or vulnerability interacts with a stress or trigger will a disorder emerge.

Vulnerability

The state in which there is a risk of encountering harm or assault, emotionally or physically.