If the Slope of the Line Measuring a Stock's Returns

question 24

Multiple Choice

If the slope of the line measuring a stock's returns against the market's returns is positive,then the stock:

• A) has a beta greater than 1.0.
• B) has no specific risk.
• C) has a positive beta.
• D) plots above the security market line.

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Definitions:

AMT Purposes

Refers to the objectives of the Alternative Minimum Tax, which is to ensure that individuals and corporations that benefit from certain exclusions, deductions, or credits pay at least a minimum amount of tax.

Tax Return

The form or forms used to report income and file income taxes with tax authorities, such as the IRS.

Gains

The increase in value of an asset or investment, representing the difference between the selling price and the purchase price.

Losses

Financial losses are considered for tax purposes as deductions from income earned, which can reduce taxable income and therefore tax liability.