Which of the Following Statements Is Most Correct

question 82

Multiple Choice

Which of the following statements is most correct?

• A) Suppose the returns on two stocks are negatively correlated.One has a beta of 1.2 as determined in a regression analysis,while the other has a beta of −0.6.The returns on the stock with the negative beta will be negatively correlated with returns on most other stocks in the market.
• B) Suppose you are managing a stock portfolio,and you have information which leads you to believe that the stock market is likely to be very strong in the immediate future,i.e. ,you are confident that the market is about to rise sharply.You should sell your high beta stocks and buy low beta stocks in order to take advantage of the expected market move.
• C) In a recent issue,The Wall Street Journal ran a story on a company named Collections Inc. ,which is in the business of collecting past due accounts for other companies,i.e. ,it is a collection agency.According to the Journal,Collections's revenues,profits,and stock price tend to rise during recessions.This suggests that Collections Inc.'s beta should be quite high,say 2.0,because it does so much better than most other companies when the economy is weak.
• D) Statements a and b are both true.
• E) Statements a and c are both true.

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Definitions:

Homosexuality

A sexual orientation characterized by a romantic or sexual attraction to individuals of the same sex.

DSM

Diagnostic and Statistical Manual of Mental Disorders; a resource used by healthcare professionals in the U.S. and much of the world as the authoritative guide to the diagnosis of mental disorders.

Psychological Disorder

A pattern of cognitive, emotional, or behavioral symptoms that impact multiple areas of life, showing distress or impairment of function.

Sociosexuality

Sociosexuality refers to individual differences in the willingness to engage in sexual activity outside of a committed relationship, reflecting variations in sexual behavior and attitudes.