Which One of the Following Statements Concerning Beta Is Correct

question 76

Multiple Choice

Which one of the following statements concerning beta is correct?

• A)The beta assigned to the overall market is zero.
• B)A stock with a beta of 1.2 earns a higher risk premium than a stock with a beta of 1.3.
• C)A stock with a beta of .5 has 50 percent more risk than the overall market.
• D)Beta is applied to the T-bill rate when computing the discount rate used for the dividend discount models.
• E)The higher the beta, the higher the discount rate used for the dividend discount model.

---

Definitions:

Variable Cost

A cost that changes in proportion to the level of output or activity.

Variable Costs

Costs that vary directly with the level of production or output, such as materials and labor.

Contribution Margin

The selling price per unit, minus the variable cost per unit, used to determine the profitability of products or services.

Fixed Costs

Business expenses that remain constant regardless of the level of goods or services produced.