Two Stocks That Have the Same Beta ____ Have the Same

question 47

Multiple Choice

Two stocks that have the same beta ____ have the same correlation because ________.

• A)may; correlation measures the sensitivity of the S&P to the market portfolio
• B)will; correlation measures the tightness of fit around the regression line
• C)may not; correlation measures the tightness of fit around the regression line
• D)may not; correlation measures the sensitivity to change
• E)None of the above.

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Definitions:

Bonds Issued

refers to the creation and sale of bonds by an issuer to investors as a form of borrowing, usually to raise capital for long-term investments.

Semiannual Interest

An interest payment made twice a year on a loan or investment.

Issuance Date

The date on which a financial instrument (e.g., bond, stock, or certificate of deposit) is issued or made available for sale.

Accrued Interest

The interest that has accumulated on a bond or loan but has not yet been paid to the lender, often recorded as a current liability on the balance sheet.