If a Firm's Beta Was Calculated as 1

question 46

Multiple Choice

If a firm's beta was calculated as 1.35 in a regression equation, a commonly-used adjustment technique would provide an adjusted beta of

• A) equal to 1.35.
• B) between 0.0 and 1.0.
• C) between 1.0 and 1.35.
• D) greater than 1.35.
• E) zero or less.

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Definitions:

Yield To Maturity

The expected total yield on a bond if it is retained until its maturity date.

Coupon Rate

The annual interest rate paid on a bond, expressed as a percentage of the bond's face value, determining the interest payments to bondholders.

Semiannual

Occurring twice a year; every six months.

Financial Leases

A type of lease where the lessee has use of the asset for a significant portion of its useful life, and the lease terms closely resemble the conditions of outright ownership.