Which of the Following Statements Is CORRECT

question 120

Multiple Choice

Which of the following statements is CORRECT?

• A) If a company with a high beta merges with a low-beta company,the best estimate of the new merged company's beta is 1.0.
• B) Logically,it is easier to estimate the betas associated with capital budgeting projects than the betas associated with stocks,especially if the projects are closely associated with research and development activities.
• C) The beta of an "average stock," which is also "the market beta," can change over time,sometimes drastically.
• D) If a newly issued stock does not have a past history that can be used for calculating beta,then we should always estimate that its beta will turn out to be 1.0.This is especially true if the company finances with more debt than the average firm.
• E) During a period when a company is undergoing a change such as increasing its use of leverage or taking on riskier projects,the calculated historical beta may be drastically different from the beta that will exist in the future.

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Definitions:

Securely Attached

Describes individuals, particularly in the context of infant-caregiver relationships, who show confidence in exploring their environment and seeking comfort from their caregiver when needed.

Homosexuality

A sexual orientation characterized by a romantic or sexual attraction to individuals of one's own sex.

Primates

A group of mammals that includes humans, apes, monkeys, and prosimians, characterized by large brains, opposable thumbs, and complex social behaviors.

Sexual Orientation

An individual's pattern of physical, romantic, and/or emotional attraction to people of the same sex, opposite sex, both sexes, or neither sex.