The Market Risk,beta,of a Security Is Equal to

question 18

Multiple Choice

The market risk,beta,of a security is equal to

• A)the covariance between the security's return and the market return divided by the variance of the market's returns.
• B)the covariance between the security and market returns divided by the standard deviation of the market's returns.
• C)the variance of the security's returns divided by the covariance between the security and market returns.
• D)the variance of the security's returns divided by the variance of the market's returns.
• E)none of the above.

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Definitions:

Rights Offering

An option for existing shareholders to buy additional shares directly from the company at a pre-determined price, usually at a discount, as a way to raise capital.

Value of a Right

The theoretical value of a subscription right, which allows existing shareholders to purchase additional shares at a discount before the new shares are offered to the public.

Initial Public Offering (IPO)

The first sale of a company's stock to the public, transitioning the company from private to public to raise equity capital.

Rights Offering

A financial mechanism allowing current shareholders to purchase additional shares directly from the company at a specified price before the shares are offered to the public.