Consider the Following Two Statements About Inflation Betas: (I) If

question 47

Multiple Choice

Consider the following two statements about inflation betas: (i) If a company's share price return is negatively related to the risk of inflation, it has a positive
Inflation beta.
(ii) Inflation betas are either positive for all equities, or negative for all equities, since inflation is a
Systematic risk factor.

• A)(i) is correct, and (ii) is incorrect.
• B)(ii) is correct and (i) is incorrect.
• C)Both (i) and (ii) are correct.
• D)Both (i) and (ii) are incorrect.
• E)Inflation is never priced in the APT.

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Definitions:

Balanced Polymorphism

A situation in which two or more alleles of a gene persist in a population because the survival advantage or disadvantage of each balances out.

Heterozygote Advantage

The phenomenon where individuals with two different alleles for a particular trait have a greater fitness than those with two identical alleles.

Frequency-Dependent Selection

A process of evolution whereby the success and reproductive viability of a genotype or phenotype is influenced by its commonness or rarity in comparison to other genotypes or phenotypes within the same population.

Genetic Drift

A mechanism of evolution that results in random changes in the allele frequencies of a population, often having a larger effect in small populations.