You Have the Following Data on (1)the Average Annual Returns

question 44

Multiple Choice

You have the following data on (1) the average annual returns of the market for the past 5 years and (2) similar information on Stocks A and B.Which of the possible answers best describes the historical betas for A and B? ​

• A)b_A > 0; b_B = 1.
• B)b_A > +1; b_B = 0.
• C)b_A = 0; b_B = −1.
• D)b_A < 0; b_B = 0.
• E)b_A < −1; b_B = 1.

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Definitions:

Shareholders

Individuals or entities that own shares in a company, giving them ownership stakes and certain rights regarding its operation.

Parent Entity

A company that holds a controlling interest in another company or subsidiary, having significant influence over its operations and financial decisions.

Total Profits

signifies the entire sum of earnings or profits generated by a business before deducting any expenses.

Unrealised Profits

Profits that have been recorded on paper through accounting but have not yet been actualized through cash transactions.