Assume the Single-Factor Model Is Applied to a Security That

question 12

Multiple Choice

Assume the single-factor model is applied to a security that has a negative factor beta.The security will:

• A)always have a positive rate of return.
• B)have an expected return greater than the risk-free rate.
• C)have an actual return that equals the risk-free rate.
• D)have an expected return equal to the market rate of return.
• E)have an actual rate of return that can be positive,negative,or zero.

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Definitions:

Longitudinal

A type of study or analysis that follows the same subjects over a period of time, observing changes and developments.

Four Years

A period equivalent to 48 months or the typical duration for completing an undergraduate degree.

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A research method that involves examining data from a population at a single point in time to investigate relationships or outcomes.

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An assessment method designed to evaluate an individual's ability to recall or recognize information.