Which One of the Following Statements Concerning Beta Is Correct

question 45

Multiple Choice

Which one of the following statements concerning beta is correct?

• A) The beta assigned to the overall market is zero.
• B) A stock with a beta of 1.2 earns a higher risk premium than a stock with a beta of 1.3.
• C) A stock with a beta of 0.5 has 50 percent more risk than the overall market.
• D) Beta is applied to the T-bill rate when computing the discount rate used for the dividend discount models.
• E) The higher the beta, the higher the discount rate used for the dividend discount models.

---

Definitions:

Genetics

The exploration of genetic inheritance and the differences in traits passed down through generations.

Reappraisal

A cognitive process that involves changing one's emotional response to a situation by altering one's interpretation of that situation.

Coping Style

The methods or strategies an individual uses to handle stress, challenges, or emotional conflict.

Threatening

The act of expressing an intention to inflict pain, injury, damage, or other hostile action on someone in retribution for something done or not done.