A Stock's Beta Measures The

question 56

Multiple Choice

A stock's beta measures the:

• A) average return on the stock.
• B) variability in the stock's returns compared to that of the market portfolio.
• C) difference between the return on the stock and the return on the market portfolio.
• D)market risk premium on the stock.

---

Definitions:

Degrees of Freedom

Represents the number of independent values or quantities which can be assigned to a statistical distribution without violating any constraining conditions.

Test Statistic

A standardized value used in statistical hypothesis testing to determine whether to reject the null hypothesis.

Uniformly Distributed

A distribution that has constant probability across the entire range of possible outcomes.

Test Statistic

A value calculated from sample data during a hypothesis test, used to decide whether to reject the null hypothesis.