For Each Additional 1 Percent Change in Market Return, the Return

question 81

Multiple Choice

For each additional 1 percent change in market return, the return on a stock having a beta of 2.2 changes, on average, by

• A)1.00 percent.
• B)0.55 percent.
• C)2.20 percent.
• D)1.10 percent.

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Definitions:

Economic Growth

The increase in the amount of goods and services produced by an economy over time, often measured by the annual percentage growth of a country's gross domestic product (GDP).

Equally-Weighted Portfolio

An investment portfolio where each asset is allocated the same proportion of the total investment, disregarding market capitalization.

Portfolio Return

The overall gain or loss of an investment portfolio, considering all sources of income and capital gains.

Single Factor APT

Arising from the Arbitrage Pricing Theory, this is an asset pricing model based on a single factor, typically the market return, to predict security returns.