Stock a Has a Beta of 1

question 63

Multiple Choice

Stock A has a beta of 1.2, and stock B has a beta of 1. The returns of stock A are ________ sensitive to changes in the market than are the returns of stock B.

• A) 20% more
• B) slightly more
• C) 20% less
• D) slightly less

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Definitions:

P-value

The probability of obtaining test results at least as extreme as the results observed, assuming that the null hypothesis is true.

Pearson Correlation

A measure of the linear correlation between two variables, giving a value between -1 and 1 where 1 implies a positive linear correlation, -1 a negative linear correlation, and 0 no linear correlation.

Null Hypothesis

A hypothesis that there is no significant difference or effect, serving as the default assumption to test against in statistical analysis.

Maximum Temperature

The highest recorded temperature in a specified period or area.