Stock A's Beta Is 1

question 57

Multiple Choice

Stock A's beta is 1.5 and Stock B's beta is 0.5. Which of the following statements must be true about these securities? (Assume market equilibrium.)

• A) Strike price.
• B) Variability of the stock price.
• C) Option's time to maturity.
• D) All of the above.

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Definitions:

Conglomerate Acquisition

The purchase of a company by a conglomerate, which is a large corporation that owns a number of smaller companies in different industries.

Ford

Ford Motor Company is a global automotive and mobility company based in the United States, known for manufacturing and selling automobiles and commercial vehicles.

K-Mart

A retail chain that was once one of America's leading discount stores, known for its blue light specials.

Tax-Free Acquisition

An acquisition in which the acquired company's shareholders do not have to pay taxes on the securities or cash they receive as part of the acquisition deal.