If Last Month a Stock with Beta of 1

question 20

Multiple Choice

If last month a stock with Beta of 1.0 lost two percent while the TSX 300 had a one percent gain, then it appears that:

• A)beta has been calculated incorrectly.
• B)the S&P 500 cannot represent the market.
• C)betas are long-term "best fit" averages, not short-term stock measures.
• D)the market index had a good month.

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Definitions:

Recognition of Depreciation

The accounting process of systematically allocating the cost of a tangible asset over its useful life, reflecting the asset's consumption, wear and tear, or obsolescence.

Acquisition Cost

The total cost incurred to acquire an asset, including the purchase price and related expenses.

Interest Costs

The amount paid for borrowing money, or the expense incurred from borrowing funds, typically expressed as an annual percentage.

Depletion Expense

An accounting and taxation method that allocates the cost of extracting natural resources, such as timber, minerals, and oil from the earth, over their extraction period.