An Asset with a Beta of 0.5 Has

question 217

Multiple Choice

An asset with a beta of 0.5 has

• A) 5 percent more risk than a risk-free asset.
• B) 50 percent more risk than a risk-free asset.
• C) half the nondiversifiable risk as a market portfolio.
• D) 5 times the nondiversifiable risk as a market portfolio.

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Definitions:

Account Analysis

A method for analyzing cost behavior in which an account is classified as either variable or fixed based on the analyst’s prior knowledge of how the cost in the account behaves.

Mixed Cost

An expense that contains both fixed and variable components, changing in total with the level of activity though containing a constant element.

Fixed Cost

Expenses that do not change in total with changes in the level of output or activity within a certain range.

Sales Volume

Refers to the total number of products a business sells over a specific time period, critical for assessing market performance.