A Beta of 1

question 35

Multiple Choice

A beta of 1.1 means that for a given 1 percent change in the value of the market, the _______ is expected to change by 1.1 percent in the same direction.

• A)risk-free rate
• B)stock's value
• C)stock's standard deviation
• D)correlation coefficient

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Definitions:

Perfectly Competitive

A market structure characterized by a large number of small firms, a homogeneous product, and freedom of entry and exit, leading to price taking behavior by all firms.

Long-run Equilibrium

Describes a state in a market where supply equals demand, with sufficient time for all factors of production to adjust and no external pressures.

Demand

The measure of a commodity or service consumers intend and are able to acquire at multiple price levels during a set time span.

Economic Profits

Profits exceeding the opportunity costs of all resources employed, including both explicit and implicit costs, signifying above-normal returns.