Which of the Following Is NOT a Potential Problem When

question 71

Multiple Choice

Which of the following is NOT a potential problem when estimating and using betas, i.e., which statement is FALSE?

• A) The fact that a security or project may not have a past history that can be used as the basis for calculating beta.
• B) Sometimes, during a period when the company is undergoing a change such as toward more leverage or riskier assets, the calculated beta will be drastically different from the "true" or "expected future" beta.
• C) The beta of an "average stock," or "the market," can change over time, sometimes drastically.
• D) Sometimes the past data used to calculate beta do not reflect the likely risk of the firm for the future because conditions have changed.
• E) All of the statements above are true.

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Definitions:

Erikson's Crises

A series of psychosocial challenges described by psychologist Erik Erikson, each stage requiring an individual to navigate and resolve psychological conflicts to develop healthily.

Identity Versus Identity Confusion

Erikson’s fifth stage of psychosocial development, in which an adolescent seeks to develop a coherent sense of self, including the role she or he is to play in society. Also called identity versus role confusion.

Intimacy Versus Isolation

Erikson’s sixth stage of psychosocial development, in which young adults either form strong, long-lasting bonds with friends and romantic partners or face a possible sense of isolation and self-absorption.

Generativity Versus Stagnation

Erikson’s seventh stage of psychosocial development, in which the middle-aged adult develops a concern with establishing, guiding, and influencing the next generation or else experiences stagnation (a sense of inactivity or lifelessness).