A Security's Beta Coefficient Will Be Negative If ________

question 27

Multiple Choice

A security's beta coefficient will be negative if ________.

• A) its returns are negatively correlated with market-index returns
• B) its returns are positively correlated with market-index returns
• C) its stock price has historically been very stable
• D) market demand for the firm's shares is very low

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Definitions:

Price Discrimination

A pricing strategy where identical or substantially similar goods or services are sold at different prices by the same provider in different markets or to different customers.

Perfect Competition

A market structure characterized by a large number of small firms, a homogeneous product, freedom of entry and exit, and perfect information, leading to firms being price takers.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, representing the benefit to consumers.

Natural Monopoly

A market condition where due to high fixed costs or unique resources, a single firm can supply a good or service to an entire market at a lower cost than what two or more firms could.