Which of the Following Statements Is False

question 40

Multiple Choice

Which of the following statements is false?

• A) Many practitioners analyze other financial characteristics of a firm when they forecast betas.
• B) Canadian Treasuries are never subject to interest rate risk unless we select a maturity equal to our investment horizon.
• C) If a firm were to change industries, using its historical beta would be inferior to using the beta of other firms in the new industry.
• D) When using historical returns to forecast future betas, we must be mindful of changes in the environment that might cause the future to differ from the past.

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Definitions:

Binding Price Ceiling

A maximum price set by the government below the equilibrium price, causing shortages.

Lower Quality

Refers to products or services that do not meet the expected standards or performance criteria compared to others in the market.

Price Ceilings

Legally imposed maximum prices on goods or services that aim to keep them affordable for consumers, which can lead to shortages if set below the market equilibrium.

Black Markets

Illegal trading systems where goods or services are bought and sold at prices not regulated by the government, often in violation of price controls or rationing.