Which of the Following Is NOT a Potential Problem with Beta

question 12

Multiple Choice

Which of the following is NOT a potential problem with beta and its estimation?

• A) Sometimes a security or project does not have a past history which can be used as a basis for calculating beta.
• B) Sometimes, during a period when the company is undergoing a change such as toward more leverage or riskier assets, the calculated beta will be drastically different than the "true" or "expected future" beta.
• C) The beta of "the market," can change over time, sometimes drastically.
• D) Sometimes the past data used to calculate beta do not reflect the likely risk of the firm for the future because conditions have changed.

---

Definitions:

Magnification

The process of enlarging the appearance of an object as viewed through an optical instrument like a microscope or telescope.

Microscope Stage

The platform on a microscope where the specimen is placed for examination.

Focusing

The act of directing one's attention or vision towards something specific.