Which of the Following Statements Is False

question 95

Multiple Choice

Which of the following statements is false?

• A) Many practitioners prefer to use average industry betas rather than individual stock betas.
• B) When estimating beta by using past returns it is best to use the longest time horizon of returns available.
• C) The CAPM predicts that a security's expected return depends on its beta with regard to the market portfolio of all risky investments available to investors.
• D) If we use too short a time horizon when estimating beta, our estimate of beta will be unreliable.

---

Definitions:

Bretton Woods Agreement

A series of agreements made in 1944 that established the rules for commercial and financial relations among major world economies, leading to the creation of the International Monetary Fund and the World Bank.

International Monetary Fund

An international organization that aims to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.

National Economies

The economic systems and activities tied to a specific country, encompassing everything from production to consumption and the management of resources.

Social Democracy

A political, social, and economic ideology that supports economic and social interventions to promote social justice within a framework of a liberal democratic polity and capitalist economy.