A Stock Has a Market-Beta of 2

question 46

Multiple Choice

A stock has a market-beta of 2.65. This means that

• A)the stock's returns will vary much more than the returns of the overall stock market.
• B)if the general stock market is up 1%, this stock will be down 2.65%.
• C)the stock is a less risky investment than an investment in the overall stock market.
• D)None of the above is true.

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Definitions:

Par Value

The nominal or face value of a bond, share of stock, or coupon as stated by the corporation or issuer.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, often referred to as shareholders' equity or owners' equity.

Cash Dividend

A cash disbursement from a corporation's earnings to its shareholders.

Common Stock

A type of equity security that represents ownership in a corporation, with shareholders entitled to vote on corporate matters and receive dividends.