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:

Down Payment

An initial upfront portion of the total amount due, typically associated with the purchase of expensive items like cars or real estate, to secure the deal.

Ordinary Annuity

A financial product involving regular payments received or paid over a designated period of time at equal intervals.

Financial Calculator

A specialized calculator designed to perform financial functions, including interest rate calculations, investment appraisal, amortization schedules, and more.

Compounded Semi-annually

Interest calculated twice a year on both the initial principal and the accumulated interest from previous periods.