Use the Following Three Statements to Answer This Question

question 53

Multiple Choice

Use the following three statements to answer this question:
I.A security with a beta of zero implies that all of the variability in this security's return is diversifiable by any investor holding a well-diversified portfolio.
II.A security with a beta of 1 implies that if the market increased (or decreased) by 1%, the return on the security would increase (decrease) by more than 1% on average.
III.A security that has a beta value cannot be priced.

• A)I, II and III are correct.
• B)I, II and III are incorrect.
• C)I is correct, II and III are incorrect.
• D)I, II are incorrect, III is correct.

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Definitions:

Defence Mechanism

Mental tactics used subconsciously to shield an individual from distress caused by intolerable ideas or emotions.

Projection

A defense mechanism where an individual attributes their own unacceptable thoughts, feelings, or motives to another person.

Motives

Internal drives or reasons that prompt an individual to act in a certain manner, aiming to fulfill a need or achieve a goal.

Defence Mechanism

Unconscious psychological strategies brought into play by various entities to manage thoughts and feelings that are perceived as socially unacceptable.