Which of the Following Statements Is False

question 72

Multiple Choice

Which of the following statements is false?

• A) Beta is the expected percent change in the excess return of the security for a 1% change in the excess return of the market portfolio.
• B) Beta represents the amount by which risks that affect the overall market are amplified for a given stock or investment.
• C) It is common practice to estimate beta based on the historical correlation and volatilities.
• D) Beta measures the diversifiable risk of a security, as opposed to its market risk, and is the appropriate measure of the risk of a security for an investor holding the market portfolio.

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Definitions:

Ray-Finned Fishes

A class (Actinopterygii) of modern bony fishes; contains about 95% of living fish species.

Tetrapods

A vertebrate group that includes all species with four limbs, such as amphibians, reptiles, birds, and mammals, including those that have lost limbs through evolution.

Eutherian Mammal

A type of mammal characterized by complex placental development, giving birth to live young at a relatively developed stage.

Primates

An order of mammals including humans, apes, monkeys, and prosimians, characterized by high intelligence and dexterous hands.