An Equity Security with Systematic Risk Equal to the Average

question 43

Multiple Choice

An equity security with systematic risk equal to the average amount of systematic risk of all equity securities in the market:

• A) has a market beta equal to one.
• B) should expect to earn the same rate of return as the average stock in the market portfolio.
• C) gives no insight into the risk premium of stock.
• D) Both a and b are correct.

---

Definitions:

Soil Moisture

The amount of water contained within soil particles, crucial for plant growth and the hydrologic cycle.

Tropical Regions

Geographic areas located near the equator, characterized by warm temperatures and significant rainfall throughout the year.

Rapid Decomposition

A process where organic matter breaks down at an accelerated rate, resulting in the quick release of nutrients and energy.

Stratified

Refers to a structure or material divided into layers, often used to describe layered deposits in geology or stratified societies in sociology.