The Beta of a Stock Has Been Estimated as 1

question 32

Multiple Choice

The beta of a stock has been estimated as 1.4 using regression analysis on a sample of historical returns. A commonly-used adjustment technique would provide an adjusted beta of

• A) 1.27.
• B) 1.32.
• C) 1.13.
• D) 1.0.

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Definitions:

Operant Conditioning

A learning process through which the strength of a behavior is modified by reinforcement or punishment, a principle established by B.F. Skinner.

Behavior

The actions or reactions of an individual, usually in relation to the environment or stimuli; how one conducts oneself.

Radio Channel

A specific frequency or band of frequencies allocated for transmitting and receiving radio waves.

Learned Helplessness

A psychological condition in which an individual perceives they have no control over the outcome of events, leading to passive or depressive behaviors.