Which of the Following Statements About Beta Is Correct

question 15

Multiple Choice

Which of the following statements about beta is correct?

• A)Firms with greater systematic risk volatilities than the market have betas that are less than 1.0, and firms with smaller systematic risk volatilities than the market have betas that are greater than 1.0.
• B)Firms with greater systematic risk volatilities than the market have betas that are greater than 1.0, and firms with smaller systematic risk volatilities than the market have betas that are less than 1.0.
• C)Firms with greater systematic risk volatilities than the market have betas that are less than zero, and firms with smaller systematic risk volatilities than the market have betas that are greater than zero.
• D)Firms with greater unsystematic risk volatilities than the market have betas that are less than 1.0, and firms with smaller unsystematic risk volatilities than the market have betas that are greater than 1.0.
• E)Firms with greater unsystematic risk volatilities than the market have betas that are greater than 1.0, and firms with smaller unsystematic risk volatilities than the market have betas that are less than 1.0.

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Definitions:

College Professorship

A faculty position at a college or university, typically involving teaching, research, and administrative responsibilities.

Probability

A measure of the likelihood that an event will occur, expressed as a number between 0 (impossibility) and 1 (certainty).

College Professorship

A senior academic position in a college or university, involving teaching, research, and possibly administrative responsibilities.

Probability

A numeric expression, between 0 and 1, indicating how probable an event is to occur.