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.

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Definitions:

Correlation Coefficient

A statistical measure that indicates the extent to which two or more variables fluctuate together.

Handheld Calculator

A small, portable electronic device used for performing mathematical calculations, ranging from basic arithmetic to complex computations.

Made a Mistake

An action or judgment that is misguided or wrong, often leading to undesirable outcomes.

Binomial Effect Size Display

A statistical method used to demonstrate the effect size of a binary outcome in a more understandable way for practical significance.