Which of the Following Statements Is FALSE

question 92

Multiple Choice

Which of the following statements is FALSE?

• A)There may be reasons to exclude certain historical data as anomalous when estimating beta.
• B)Many practitioners use adjusted betas,which are calculated by averaging the estimated beta with 1.0.
• C)The beta estimated from linear regression can be very sensitive to outliers,which are returns of unusually small magnitude.
• D)If we use very old data when estimating beta,the data may be unrepresentative of the current market risk of the security.

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Definitions:

Fiscal Year

A one-year period used for financial reporting and budgeting, which does not necessarily align with the calendar year.

Federal Government

The national government of a federal country that is responsible for national affairs, the implementation of federal laws, and the administration of common interests and national decisions.

Marginal

Referring to the effect of a change in one unit on an overall condition, often used in the context of marginal cost, revenue, and utility in economics.

Payroll Tax

Taxes imposed on employers or employees, usually calculated as a percentage of the salaries that employers pay their staff.