Which of the Following Is True Regarding the Beta Coefficient

question 207

Multiple Choice

Which of the following is true regarding the beta coefficient?

• A) It is a measure of unsystematic risk.
• B) A beta greater than one represents lower systematic risk than the market.
• C) Generally speaking, the higher the beta the higher the expected return.
• D) A beta of one indicates an asset is totally risk-free.
• E) The risk premium of an asset will increase if the beta of that asset decreases.

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Definitions:

Traumatic Experiences

Events or situations that cause psychological trauma due to their intense stress and the feeling of being overwhelmed.

Children

Individuals in the early stages of human development, typically considered to be from birth to adolescence.

Confabulation

The production of fabricated, distorted, or misinterpreted memories about oneself or the world, without the conscious intention to deceive.

Imagined Event

A scenario or occurrence that is created in the mind but has not actually happened in reality.