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:

Guarantor

A person or organization that commits to covering someone else's financial obligations or contract performance should the primary party fail to fulfill their responsibilities.

Fraud

Fraud is an intentional deception made for personal gain or to damage another individual.

Improperly Installed

Refers to equipment, devices, or systems that have not been installed according to the manufacturer’s guidelines or industry standards, potentially leading to malfunction or hazard.

Writ of Execution

A court order granting a creditor the right to take possession of a debtor's property after a court judgment.