Which One of the Following Statements Is More Likely to Be

question 19

Multiple Choice

Which one of the following statements is more likely to be correct concerning the comment, "Stock A has a higher expected return than Stock B"?

• A) Stock A has more unique risk.
• B) Stock B plots below the security market line.
• C) Stock B is a cyclical stock.
• D)Stock A has a higher beta.

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Definitions:

Contribution Margin Ratio

A financial metric expressing the percentage of each sales dollar remaining after variable costs are subtracted.

Fixed Expenses

Costs that do not change with the level of production or sales over a certain period, such as rent, salaries, and insurance.

Unit Contribution Margin

The difference between the selling price of a unit and its variable costs, indicating how much each unit contributes to covering fixed costs and generating profit.

Sales Volume

The total number of units sold within a specific period, often used as an indicator of business performance.