What Is the Most Logical Explanation for a +2

question 123

Multiple Choice

What is the most logical explanation for a +2.0% return on a stock with a Beta of 1.0 in a month where the market returned +1.0%?

• A)The stock is aggressive
• B)The market is undervalued
• C)Favourable firm-specific news was reported
• D)The Beta is incorrect

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Definitions:

Resource Maximization

It is the technique or strategy of optimally utilizing resources to achieve the highest possible output or efficiency.

Least-costly Combination

A perfect combination of resources that lowers the production cost while reaching a target output level.

Profits

Financial gains realized when the revenues from business activities exceed the expenses, costs, and taxes needed to sustain the operation.

Profit-maximizing Combination

An optimal mix of inputs or factors of production that results in the highest possible profit for a firm, given the costs and available resources.