You Have Developed Data Which Give (1)the Average Annual Returns

question 86

Multiple Choice

You have developed data which give (1) the average annual returns on the market for the past five years,and (2) similar information on Stocks A and B.If these data are as follows,which of the possible answers best describes the historical betas for A and B?

• A) β_A > 0;β_B = 1
• B) β_A > +1;β_B = 0
• C) β_A = 0;β_B = −1
• D) β_A < 0;β_B = 0
• E) β_A < −1;β_B = 1

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Definitions:

Marginal Revenue Product

The boost in revenue achieved by adding one more unit of a factor involved in production.

Marginal Product

The additional output that results from using one more unit of a particular input, keeping other inputs constant.

Variable Input

Any resource used in production whose quantity can be changed in the short term to increase or decrease output.

Marginal Revenue Product Curve

A graphical representation showing how the additional revenue generated by employing one more unit of a resource varies with the quantity of the resource employed.