The Average of Beta Values for All Individual Stocks Is

question 111

Multiple Choice

The average of Beta values for all individual stocks is:

• A)greater than 1.0; most stocks are aggressive.
• B)less than 1.0; most stocks are defensive.
• C)unknown; Betas are continually changing.
• D)exactly 1.0; these stocks represent the market.

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Definitions:

Abnormal Earnings

The profits that exceed or fall short of the expected normal rate of return for a business.

Actual Earnings

The real profits generated by a company over a specific period, after accounting for all expenses.

Price of Equity

The cost of raising capital through the sale of shares, including the dilution of ownership and dividend distribution to shareholders.

Book Value

The net value of a company's assets, as recorded on the balance sheet, minus its liabilities and intangible assets.