A Stock's Beta Is More Relevant as a Measure of Risk

question 120

True/False

A stock's beta is more relevant as a measure of risk to an investor who holds only one stock than to an investor who holds a well-diversified portfolio.

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Definitions:

Profit

The financial gain obtained when the revenue earned from business activities exceeds the expenses, costs, and taxes involved in sustaining the activity.

Economies of Scale

The cost advantage that arises with increased output of a product, leading to a reduction in the per-unit cost of production.

Average Total Cost

The total cost of production (fixed and variable costs combined) divided by the number of units produced, indicating the cost per unit of output.

Operation Size

The scale or scope of a business's activities, ranging from small, single-location operations to large, multinational corporations.