The Beta of a Security Captures the Security's ________ to Market

question 27

Multiple Choice

The beta of a security captures the security's ________ to market risk.

• A) performance
• B) required return
• C) sensitivity
• D) expected return

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Definitions:

Expected Cash Flows

The projected amount of cash that is anticipated to be generated or expended over a certain period in the future.

Present Value

The contemporary valuation of future monetary sums or cash flow chains, determined by a designated rate of return.

Probability

A measure of the likelihood that an event will occur, expressed as a number between 0 and 1.

Time Value

The principle that having money now is more valuable than the same sum in the future because of its ability to earn more over time.