Which One of the Following Must Be Equal for Two

question 7

Multiple Choice

Which one of the following must be equal for two individual securities with differing betas if those securities are correctly priced according to the capital asset pricing model?

• A)standard deviation
• B)rate of return
• C)beta
• D)risk premium
• E)reward-to-risk ratio

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Definitions:

Merchandise Sold

The total goods that have been sold by a company, typically measured over a specific period like a fiscal quarter or year.

Physical Inventory

The process of counting by hand the actual inventory of a business at a specific point in time.

Net Income

The net income of a business following the deduction of all costs, taxes, and expenses from its total earnings.

Gross Profit Rate

The gross profit rate is a financial metric indicating the percentage of revenue that exceeds the cost of goods sold, showcasing the efficiency of a company in managing its production costs.