When Using the Empirical Approach,rather Than a Risk-Based Model,to Compute

question 44

Multiple Choice

When using the empirical approach,rather than a risk-based model,to compute an expected rate of return on a security,the beta values are replaced with:

• A)the ratio of the market rate of return to the risk-free rate.
• B)a singular value equal to the market-to-book value of the firm.
• C)the firm's various attributes.
• D)the ratio of the firm's historical average return to the risk-free rate.
• E)the average standard deviation of the security's historical returns.