Which of the Following Statements Is False

question 26

Multiple Choice

Which of the following statements is false?

• A) Beta measures the sensitivity of a security to market-wide risk factors.
• B) Volatility measures total risk, while beta measures only systematic risk.
• C) The beta is the expected percentage change in the excess return of the market portfolio for a 1% change in the excess return of a security.
• D) Utilities tend to be stable and highly regulated, and thus are insensitive to fluctuations in the overall market.

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Definitions:

Fixed Factors

Inputs in the production process that remain constant and cannot be easily increased or decreased in the short term, such as machinery or land.

Economic Profits

Profits earned by a firm after accounting for both explicit and implicit costs, indicating the total returns exceeding the costs of all resources employed.

Economic Profit

The difference between a firm's total revenue and its total costs, including both the explicit and implicit costs, representing the financial gain exceeding the opportunity costs.

Total Revenue

The gross income of a company, which is the sum of money generated from its goods or services sold before deducting any costs.