Which One of the Following Is the Best Indication That

question 5

Multiple Choice

Which one of the following is the best indication that a security is correctly priced according to the Capital Asset Pricing Model?

• A)beta of zero
• B)beta of 1.0
• C)alpha of zero
• D)alpha of 1.0
• E)alpha of −1.0

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Definitions:

Regressive Tax

A tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases, disproportionately affecting those with lower incomes.

Tax Rate Structure

The framework defining how tax rates progress based on variables such as income level, value of property, or volume of transaction.

Proportional Tax

A tax system where the tax rate remains constant regardless of the amount of the taxable income or goods.