Which of the Following Statements Is Correct

question 64

Multiple Choice

Which of the following statements is correct?

• A) If the returns on a stock could vary widely,and its standard deviation is large,then the stock will necessarily have a large beta coefficient.
• B) A stock that is more highly positively correlated with "The Market" than most stocks would not necessarily have a beta coefficient that is greater than 1.0.
• C) A stock's standard deviation of returns is a measure of the stock's "stand-alone" risk,while its coefficient of variation measures its risk if the stock is held in a portfolio.
• D) A portfolio that contained 100 low-beta stocks would be riskier than a portfolio containing 100 high-beta stocks.
• E) Negative betas cannot exist;if you calculate one,you made an error.

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Definitions:

Property Taxes

Taxes levied by local governments on the value of real estate owned by individuals or businesses.

Valuation Rate

A rate used to estimate the current value of cash flows or assets, often used in the appraisal of businesses.

Market Value

Market value is the price at which an asset would trade in a competitive auction setting, reflecting its worth in the current market.

Gross Income

The total income earned before any deductions or taxes are applied.