The Average of Beta Values for All Individual Stocks Is

question 53

Multiple Choice

The average of beta values for all individual stocks is:

• A) greater than 1.0; most stocks are aggressive.
• B) less than 1.0; most stocks are defensive.
• C) unknown; betas are continually changing.
• D) exactly 1.0; these stocks represent the market.

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Definitions:

Entry Barriers

Obstacles that make it difficult for new firms to enter a market, including high start-up costs, stringent regulations, and strong incumbent competition.

Brand Loyalty

The tendency of consumers to continuously purchase one brand's products over competing brands due to preference or satisfaction.

Monopoly Power

The ability of a single producer or seller in a market to control prices and exclude competition, often leading to less choice and higher prices for consumers.

Cartels

An agreement among competing firms to control prices or exclude entry of a new competitor in a market, often to maximize profits collectively.