An Analyst Computes a Beta Coefficient with a Low Standard

question 37

Multiple Choice

An analyst computes a beta coefficient with a low standard error. This implies that

• A)this particular beta is more reliable than most.
• B)this particular beta has little meaning.
• C)too few observations were used to compute this particular beta.
• D)this stock responds less to market changes than most stocks.

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Definitions:

FDIC

The Federal Deposit Insurance Corporation (FDIC) is a United States government agency created in 1933 to insure deposits in banks and thrift institutions for at least $250,000 per depositor, per insured bank, for each account ownership category.

Deposit Insurance

A guarantee provided typically by a government agency to protect depositor's funds up to a certain amount in the event of a bank failure.

Banking Crisis

A situation in which a large part of the banking sector becomes insolvent, leading to a loss of confidence and potentially a run on banks.

FDIC

The Federal Deposit Insurance Corporation, a U.S. government agency that insures deposits in banks and thrift institutions to maintain public confidence and encourage stability in the financial system.