The Beta of a Security Is Calculated by Dividing the

question 3

Multiple Choice

The beta of a security is calculated by dividing the

• A)variance of the market by the covariance of the security with the market.
• B)correlation of the security with the market by the variance of the security.
• C)variance of the market by the correlation of the security with the market.
• D)covariance of the security with the market by the variance of the market.
• E)covariance of the security with the market by the variance of the security.

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Definitions:

Return On Investment (ROI)

A measure of profitability calculated by dividing net profit by the cost of investments.

Return On Investment (ROI)

A performance measure used to evaluate the efficiency of an investment by comparing its gain to its cost.

Contribution Margin Ratio

The proportion of revenue from each dollar of sales that goes toward covering fixed expenses and creating profit.

Fixed Expenses

Costs that do not fluctuate with changes in production level or sales volume, such as leases and insurance premiums.