Utilizing the Security Market Line an Investor Owning a Stock

question 60

Multiple Choice

Utilizing the security market line an investor owning a stock with a beta of -2 would expect the stock's return to ____ in a market that was expected to decline 15 percent.

• A) Rise or fall an indeterminate amount
• B) Fall by 3%
• C) Fall by 30%
• D) Rise by 13%
• E) Rise by 30%

---

Definitions:

Profit

The financial gain achieved when the revenue from business activities exceeds the expenses, costs, and taxes involved in maintaining the operation.

Standard Costs

Predetermined costs for products or services, used as benchmarks for evaluating actual performance and cost control.

Step-Down Method

An allocation method used in cost accounting to assign costs in a hierarchical manner, from the highest level down to the lowest.

Personnel Department

A division within an organization responsible for managing human resources, including recruitment, employment, and workplace culture.