Which One of These Statements Related to Beta Is Correct

question 44

Multiple Choice

Which one of these statements related to beta is correct?

• A)Firm betas have less error than industry betas.
• B)Firms should always rely on their own beta rather than their industry's beta.
• C)Beta is unaffected by a firm's capital structure.
• D)The sample size used to compute beta may be too small to yield a reliable result.
• E)Firm betas rarely vary over time.

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Definitions:

Current Ratio

An indicator measuring a corporation's potential to handle its short-term financial obligations with assets on hand.

Common Size

A financial analysis technique that expresses each line item in a financial statement as a percentage of a base figure, aiding in comparison across different financial periods or companies.

Financial Statements

Documents that provide an overview of a company's financial condition in both short and long term, including balance sheet, income statement, and cash flow statement.

Stakeholders

Individuals or groups who have an interest in the success or performance of a company, including employees, customers, investors, suppliers, and the community.