The Beta of a Stock Has Been Estimated as 0

question 11

Multiple Choice

The beta of a stock has been estimated as 0.85 using regression analysis on a sample of historical returns.A commonly used adjustment technique would provide an adjusted beta of ___________.

• A)1.01
• B)0.95
• C)1.13
• D)0.90
• E)none of the above

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Definitions:

Rescind

means to revoke, cancel, or repeal a contract, decision, or agreement.

Future Transactions

Predicted or planned financial dealings that will take place at a later date.

Annul

To legally declare invalid or void, commonly used in contexts such as marriage annulment, which renders the marriage as if it never existed.

Confidential Relationship

A relationship where one party places trust and confidence in another with the expectation that the latter will act in their best interest, typically involving nondisclosure of certain information.