The Beta of a Security Is Calculated by Dividing the

question 3

Multiple Choice

The beta of a security is calculated by dividing the

• A)variance of the market by the covariance of the security with the market.
• B)correlation of the security with the market by the variance of the security.
• C)variance of the market by the correlation of the security with the market.
• D)covariance of the security with the market by the variance of the market.
• E)covariance of the security with the market by the variance of the security.

---

Definitions:

MS

An acronym that can stand for Mean Square, a term used in ANOVA, indicating the average of the squares of differences (variances) within groups.

F-test Statistic

A statistical test used to compare two variances to see if they come from populations with equal variances.

One-way ANOVA

A statistical analysis used to determine if there are significant discrepancies in the average values of three or more independent groups.

MST/MSE

Mean Squared Error (MSE) is a measure of the average squared difference between estimated and actual values, used as an indicator of the accuracy of predictive models.