Beta Coefficients 1) Are a Measure of Systematic Risk

question 4

Multiple Choice

Beta coefficients
1) are a measure of systematic risk
2) relate the return on an individual security to
The return on the market
3) measure the variability of as asset's return

• A) 1 and 2
• B) 1 and 3
• C) 2 and 3
• D) all of the above

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Definitions:

Coin Flips

A simple probabilistic experiment to demonstrate the concept of randomness and chance, often used to illustrate the principle of a 50/50 chance in binary outcomes.

Addition Rule

A principle in probability stating that the probability of the occurrence of at least one of two events is the sum of their individual probabilities, minus the probability of both occurring together.

Possible Outcomes

The set of all distinct outcomes that can result from a particular statistical experiment or random event.

Events

Occurrences or happenings, especially significant ones that can be statistically analyzed.