Last Month a Stock with a Beta of 1

question 36

Multiple Choice

Last month a stock with a beta of 1.0 lost 20% while the S&P 500 had a 10% gain.Given this,it is most likely that the:

• A) stock's beta has been calculated incorrectly.
• B) S&P 500 cannot represent the overall market.
• C) firm released some negative information about itself.
• D) the market index had an exceptionally good month.

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Definitions:

Break-even Price

The market price at which the costs of production equal the revenues for a product, resulting in no net loss or gain.

Selling Price

The purchase price is the sum a consumer spends to obtain goods or services from a vendor.

Markdown

A reduction from the original or list price of a product or service to increase its attractiveness to buyers.

Motorcycle

A two-wheeled motor vehicle that is faster and more fuel-efficient than a car, used for transportation, recreation, and sports.