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.

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including the cost of materials and labor.

Net Sales

The amount of revenue from sales after deducting returns, allowances for damaged or missing goods, and discounts.

Comprehensive Income

The total change in equity for a reporting period other than from transactions with owners, including all unrealized gains and losses.

Balance Sheet

A financial statement that reports a company's assets, liabilities, and stockholders' equity at a specific point in time, providing insights into its financial health and stability.