Which of the Following Statements Is Correct

question 9

Multiple Choice

Which of the following statements is correct?

• A) If the returns on a share could vary widely, and its standard deviation is large, then the share will necessarily have a large beta coefficient.
• B) A share that is more highly positively correlated with "The Market" than most shares would not necessarily have a beta coefficient that is greater than 1.0.
• C) A share's standard deviation of returns is a measure of the share's "stand-alone" risk, while its coefficient of variation measures its risk if the share is held in a portfolio.
• D) A portfolio that contained 100 low-beta shares would be riskier than a portfolio containing 100 high-beta shares.
• E) Negative betas cannot exist; if you calculate one, you made an error.

Understand the concept of social efficiency and how market prices can misrepresent societal value.

Understand the concepts of market efficiency and equity.

Recognize the causes and consequences of market failure.

Identify examples of negative externalities and public goods.

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Definitions:

Electra Complex

A psychoanalytic theory describing a girl's sense of competition with her mother for the affections of her father.

Psychoanalytic Theory

A comprehensive theory developed by Sigmund Freud that attempts to explain human behavior through unconscious motivations and conflicts.

Freud

Sigmund Freud, an Austrian neurologist and the founder of psychoanalysis, a method for treating psychopathology through dialogue.

Evolutionary Theory

When used in human development, the idea that many current human emotions and impulses are a legacy from thousands of years ago.