Which One of the Following Statements Concerning Beta Is Correct

question 16

Multiple Choice

Which one of the following statements concerning beta is correct?

• A)The beta assigned to the overall market is zero.
• B)A stock with a beta of 1.2 earns a higher risk premium than a stock with a beta of 1.3.
• C)A stock with a beta of .5 has 50 percent more risk than the overall market.
• D)Beta is applied to the T-bill rate when computing the discount rate used for the dividend discount models.
• E)The higher the beta, the higher the discount rate used for the dividend discount models.

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Definitions:

Uncontrolled Variable

An uncontrolled variable is a factor that can affect the outcome of an experiment but is not kept constant or limited by the researcher.

Malpractice

The failure of a professional to meet the accepted standards of their profession, resulting in harm to their client or patient.

Competent

Refers to having the necessary ability, knowledge, or skill to do something successfully.

Extraneous Variables

Variables other than the independent variable that may affect the outcome of an experiment, potentially leading to inaccurate results if not controlled.