Which of the Following Statements Is False

question 95

Multiple Choice

Which of the following statements is false?

• A) Many practitioners prefer to use average industry betas rather than individual stock betas.
• B) When estimating beta by using past returns it is best to use the longest time horizon of returns available.
• C) The CAPM predicts that a security's expected return depends on its beta with regard to the market portfolio of all risky investments available to investors.
• D) If we use too short a time horizon when estimating beta, our estimate of beta will be unreliable.

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Definitions:

Accounts Receivable Policies

Guidelines and procedures a company follows to manage money owed by customers for goods or services delivered on credit.

Shares of Stock

Shares, as units of corporate or asset ownership, provide an even allocation of profit distributions in the guise of dividends, pending announcements.

Cash Flow

A financial term describing the net amount of cash and cash-equivalents being transferred into and out of a business.

Firm's Assets

All owned resources with economic value that an entity (firm) possesses, anticipated to provide future benefits.