The Beta Is the Expected Percent Change in the Excess

question 67

Multiple Choice

The beta is the expected percent change in the excess return of a security for a 1% change in the ________ of the market portfolio.

• A) average return
• B) annual return
• C) weighted return
• D) excess return

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Definitions:

Scrap Value

The estimated value that an asset will realize upon its sale at the end of its useful life, typically a minimal amount reflecting its residual value.

Straight-Line Method

A depreciation method that allocates an equal amount of the cost of an asset to each year of its useful life.

Scrap Value

The projected amount an asset is expected to generate when it is sold after reaching the end of its lifespan.

Double-Declining-Balance

A method of accelerated depreciation which doubles the rate of straight line depreciation, expensing more of the asset's value in the early years of its life.