Assuming the Single-Factor Model Applies,the Factor Beta for the Market

question 49

Multiple Choice

Assuming the single-factor model applies,the factor beta for the market portfolio is:

• A)zero.
• B)one.
• C)the average of the risk-free beta and the beta for the highest risk security in the portfolio.
• D)impossible to calculate without collecting sample data.
• E)irrelevant to the model.

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Definitions:

Maturation

The process of growth and development, both physically and psychologically, following a biological or innate sequence.

Stability

The state or quality of being stable; firmness in position, continuity without change, dependability, or resistance to change.

Nurture

In psychology, this term emphasizes the role of environmental factors and experiences in shaping an individual's development, as opposed to genetic inheritance.

Association Areas

Regions of the cerebral cortex that integrate and process information from the sensory and motor areas, involved in complex functions such as language, problem solving, and spatial reasoning.