The Beta of ABC Co

question 77

Multiple Choice

The beta of ABC Co.stock is the slope of:

• A)the security market line.
• B)the characteristic line for a plot of returns on the S&P 500 versus returns on short-term Treasury bills.
• C)the arbitrage pricing line.
• D)the characteristic line for a plot of ABC Co.returns against the returns of the market portfolio for the same period.

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Definitions:

Working Backward

A problem-solving strategy that involves starting from the desired solution or goal and working in reverse to determine the steps needed to reach that goal.

Well-Specified Goal

A clear and detailed objective that is explicitly defined, making it understandable and achievable.

Many Options

The state of having numerous choices available in a given situation, allowing for flexibility in decision-making.

Heuristics

Mental shortcuts or rules of thumb that simplify decision making or problem solving, often leading to quick but not always accurate judgments.