Which One of These Statements Is Correct

question 50

Multiple Choice

Which one of these statements is correct?

• A) Betas can be measured exactly.
• B) If a stock has a very low beta, it is likely to have a high beta in the future.
• C) The expected future risk premium is easy to accurately determine.
• D) CAPM is widely used as a means of estimating expected returns.

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Definitions:

Diversification

The strategy of spreading investments across various asset classes or sectors to reduce risk.

Merger

A strategic business action where two entities consolidate their assets, operations, and management with the aim of fostering growth or competitive advantage.

Shareholder Rights Plan

A defensive strategy used by corporations to deter hostile takeovers by issuing new shares to existing shareholders, making a takeover more expensive.