Which of the Following Is Not a Difficulty Concerning Beta

question 87

Multiple Choice

Which of the following is not a difficulty concerning beta and its estimation?

• A) Sometimes a security or project does not have a past history which can be used as a basis for calculating beta.
• B) Sometimes,during a period when the company is undergoing a change such as toward more leverage or riskier assets,the calculated beta will be drastically different than the "true" or "expected future" beta.
• C) The beta of an "average stock," or "the market," can change over time,sometimes drastically.
• D) Sometimes the past data used to calculate beta do not reflect the likely risk of the firm for the future because conditions have changed.
• E) All of the above are potentially serious difficulties.

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Definitions:

Industrial Production

The total output of the industrial sector, including manufacturing, mining, and utilities, within an economy.

Economic Indicators

Statistics and data points used to gauge the overall health of the economy.

Increases

Refers to a rise or growth in a particular metric or quantity, such as price, value, or quantity.

Coupon Rate

The annual interest rate paid by a bond relative to its face value, representing the yield an investor expects to earn if the bond is held to maturity.