If the Returns of Two Firms Are Negatively Correlated, Then

question 29

True/False

If the returns of two firms are negatively correlated, then one of them must have a negative beta.

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Definitions:

Living Standards

The level of wealth, comfort, material goods, and necessities available to a certain socioeconomic class or geographic area.

GDP Growth

An increase in a country's gross domestic product over time, indicating economic expansion.

Cost of Capital

The cost of funds used for financing a business, often considered as the required rate of return to make a capital budgeting project, such as building a new factory, worthwhile.

Net Present Value

A method used to evaluate the feasibility of a project or investment by calculating the difference between the present value of cash inflows and outflows over a period of time.