Which of the Following Statements Is False

question 55

Multiple Choice

Which of the following statements is false?

• A) There may be reasons to exclude certain historical data as anomalous when estimating beta.
• B) Many practitioners use adjusted betas, which are calculated by averaging the estimated beta with 1.0.
• C) The beta estimated we obtain from linear regression can be very sensitive to outliers, which are returns of unusually small magnitude.
• D) If we use very old data to when estimating beta, they data may be unrepresentative of the current market risk of the security.

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Definitions:

Recall

The ability to remember and retrieve information from memory.

Priming

A psychological phenomenon where exposure to one stimulus influences the response to a subsequent stimulus, without conscious guidance or intention.

Missing-child Poster

A public notice that displays information and a photograph of a child who has been reported missing, aimed at soliciting the public's help in locating the child.

Kidnapping

The illegal act of abducting someone typically to obtain a ransom or fulfill another motive against the victim's will.