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:

Paired T-test

An analytical procedure for evaluating if two associated groups have significantly different means.

Middle Distance Runners

Athletes who specialize in running races that are longer than sprints and shorter than long-distance races, typically ranging from 800 meters to 3000 meters.

Confidence Interval

A range of values, derived from sample statistics, that is likely to contain the value of an unknown population parameter at a given confidence level.

Mean Difference

The average difference between each of two sets of numbers, often used in statistical analysis to compare two groups.