What Is the Most Likely Explanation for a +20

question 49

Multiple Choice

What is the most likely explanation for a +20.0% return on a stock with a beta of 1.0 in a month when the market returned +10.0%?

• A) The stock is aggressive.
• B) The market is undervalued.
• C) Favorable firm-specific news was reported.
• D) The beta is really less than 1.0.

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Definitions:

Cross-Price Elasticity

Measure of how the quantity demanded of one good responds to a change in the price of another good.

Positive

Affirmative, constructive, or based on factual data; often used in reference to positive statements in economics which describe the world as it is, rather than how it should be.

Good Y

A general term used to represent a specific product or commodity in economic models or discussions.

Demand Function

A mathematical representation that describes the relationship between the quantity of a good that consumers are willing and able to purchase at various prices, holding other factors constant.