A Security with a Beta of 1

question 22

Multiple Choice

A security with a beta of 1.0 should offer a return

• A)between the return on the market portfolio and the risk-free interest rate.
• B)equal to the return on the market portfolio.
• C)equal to the risk-free interest rate.
• D)greater than the return on the market portfolio.

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Definitions:

Market Value

The present cost at which a service or asset is available for purchase or sale on an open market.

Selling Price

The amount of money for which a product or service is sold to customers, which may include discounts, promotions, or variable pricing strategies.

Conservatism

An accounting principle that requires potentially uncertain expenses and liabilities to be recognized promptly, but revenues only when they are assured.

Accounting Principle

Fundamental guidelines or rules that govern financial accounting practices.