Assume a Security Has No Unsystematic Risk

question 23

Multiple Choice

Assume a security has no unsystematic risk.Given this,the excess return on that security will be the highest if the factor,F,________ and the beta for that factor is ________.

• A)increases in value; high
• B)increases in value; low
• C)remains constant; zero
• D)decreases in value; high
• E)decreases in value; low

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Definitions:

Domestic Investment

Domestic investment is the spending on capital equipment, inventories, and structures within a country by its residents and businesses.

Trade Deficits

A situation where a country's imports of goods and services exceed its exports.

Domestic Investment

The total amount of money that is invested within a country's borders by both the public and private sectors.

U.S. Saving

The portion of disposable income that is not spent on consumption of goods and services in the United States, but set aside for future use.