Which of the Following Statements Is FALSE

question 1

Multiple Choice

Which of the following statements is FALSE?

• A)Beta is the expected percent change in the excess return of the security for a 1% change in the excess return of the market portfolio.
• B)Beta represents the amount by which risks that affect the overall market are amplified for a given stock or investment.
• C)It is common practice to estimate beta based on the historical correlation and volatilities.
• D)Beta measures the diversifiable risk of a security,as opposed to its market risk,and is the appropriate measure of the risk of a security for an investor holding the market portfolio.

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Definitions:

Accounting Record

Documentation and books kept for the purpose of recording all financial transactions of an entity.

Natural Disasters

Natural disasters are severe, sudden events caused by environmental factors that can cause significant damage, loss, or changes to life, property, and the economy, including hurricanes, earthquakes, and floods.

Safeguard Assets

Implemented measures and policies to protect a company’s assets from theft, damage, or misuse.

Internal Controls

A set of procedures and policies designed to ensure the accuracy and completeness of financial reporting, safeguard assets, and ensure compliance with laws and regulations.