At Mountain View Optical Systems, Important Decisions Are Usually Made

question 8

Multiple Choice

At Mountain View Optical Systems, important decisions are usually made at the top. Mountain View Optical has a ________ organization.

• A)flat
• B)wide
• C)narrow
• D)centralized
• E)decentralized

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Definitions:

Beta

A measure of a stock's volatility in relation to the overall market; a beta greater than 1 indicates higher volatility than the market.

SML

The Security Market Line, a graphical representation of the Capital Asset Pricing Model (CAPM) showing the relationship between the expected return of a security and its risk.

CML

The Capital Market Line, representing the risk-return trade-off of efficient portfolios in the capital market theory; it shows the highest return possible for any given level of risk.

Well-Diversified Portfolios

Investment portfolios that contain a wide variety of assets to minimize exposure to any single asset or risk.