Which of the Following Methods Involves Calculating an Average Beta

question 3

Multiple Choice

Which of the following methods involves calculating an average beta for comparable firms and using that beta to determine a project's beta?

• A)Risk premium method
• B)Pure play method
• C)Accounting beta method
• D)CAPM method
• E)Discounted cash flow model

Explain how the trading of shares impacts a corporation, including the effects on share capital and financial position.

Understand the different reasons a company might issue shares, repurchase its own shares, or undergo a stock split.

Recognize the legal and financial implications of shareholder liability and corporate governance, including the role of the board of directors.

Identify how the market perceives and values a corporation, including market capitalization and the factors influencing share prices.

---

Definitions:

Liable

Legally responsible or obligated.

Bailment

The legal relationship where physical possession of personal property is transferred from one person (the bailor) to another (the bailee) who subsequently has possession of the property under a contract.

Automobile

A vehicle on wheels designed for transport, commonly propelled by an internal combustion engine or an electric motor.

Proprietor

An individual who owns and runs a business, possessing exclusive legal rights and responsibilities regarding its operations.