Use the Information for the Question(s)below

question 92

Multiple Choice

Use the information for the question(s) below.
Suppose the market portfolio's excess return tends to increase by 30% when the economy is strong and decline by 20% when the economy is weak.A type S firm has excess returns that increase by 45% when the economy is strong and decrease by 30% when the economy is weak.A type I firm will also have excess returns of either 45% or -30%,but the type I firm's excess returns will depend only upon firm-specific events and will be completely independent of the state of the economy.
-What is the beta for a type I firm?

• A)1.0
• B)0.75
• C)0.0
• D)1.5

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Definitions:

Fertility Rate

A measure of population growth through reproduction; often expressed as the number of births per 1,000 people in a particular population or the average number of children a woman would bear over a lifetime.

Renewable Resource

A natural resource that can replenish itself over time through natural processes, such as sunlight, wind, rain, tides, and geothermal heat, making it sustainable for ongoing use.

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The increase in extreme weather patterns linked to global warming.

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Powerful tropical storms with strong winds and heavy rain, known for their potential to cause significant damage.