Environmental Analysis Requires Continual Questioning of All These Assumptions Except

question 24

Multiple Choice

Environmental analysis requires continual questioning of all these assumptions except

• A) a priori ideas about the structure of the relevant industry.
• B) continual updating of environmental knowledge.
• C) presuppositions about who is and is not a competitor.
• D) biases about how to make money in the industry.

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Definitions:

SMB Beta

A measure used in the evaluation of stocks, indicating a stock's sensitivity to movements in the small minus big (SMB) factor, part of the Fama-French three-factor model.

HML Beta

A measure of sensitivity to the HML (High Minus Low) factor, part of the Fama-French three-factor model, indicating how much a stock's return is affected by the value premium.

Risk Premium

The additional return expected on an investment for taking on higher risk compared to a risk-free asset.

SMB Beta

A measure used in financial models to estimate the sensitivity of a stock’s return relative to the return of a small-minus-big (SMB) factor, part of the Fama-French three-factor model.