Change in Its Beta Is Likely to Affect the Required

question 90

True/False

change in its beta is likely to affect the required rate of return on a stock, which implies that a change in beta will likely have an impact on the stock's price, other things held constant.

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Definitions:

Future Positions

Contracts to buy or sell a specific quantity of a commodity, currency, or financial instrument at a predetermined price at a future date.

Daily Settlement

The process of settling trades at the end of each trading day, including the calculation of gains and losses.

Maintenance Margin

The minimum amount of equity that must be maintained in a margin account after a purchase has been made, in order to keep the account open.

Trader's Margin

The amount of equity contributed by a trader as a percentage of the current market value of the securities held in a trading account.