Which One of These Statements Related to Beta Is Correct

question 64

Multiple Choice

Which one of these statements related to beta is correct?

• A)A firm with a given sales cyclicality can reduce its beta by replacing variable production costs with fixed costs.
• B)The beta of debt is generally assumed to equal the market beta.
• C)Highly cyclical stocks tend to have low betas.
• D)The levered beta of equity exceeds the asset beta.
• E)Stocks with a high variance must have a high beta.

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Definitions:

Asthma

A condition in which the tubes of the bronchial tree become obstructed due to inflammation.

Breathing Capacity

The maximum volume of air that the lungs can hold or the total amount of air one can inhale and exhale.

Artifact

In a medical context, an artifact refers to any distortion or error in images (e.g., X-rays, MRIs) not caused by the actual structures of the body being imaged.

Peak Flow Zone

A term used in respiratory care to denote ranges of peak expiratory flow rates indicative of the severity or control of asthma.