Which of the Following Statements Is False

question 41

Multiple Choice

Which of the following statements is false?

• A) One difficulty when trying to estimate beta for a security is that beta depends on the correlation and volatility of the security's and market's realized returns in the past.
• B) Having identified the S&P/TSX Composite Index as a market proxy, the next step in calculating the risk premium for a security is to determine the security's beta.
• C) Many data sources provide estimates of beta based on historical data.
• D) The differences in betas by industry reflect the sensitivity of each industry's profits to the general health of the economy.

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