The Coefficient of Determination, R², Demonstrates That Beta

question 25

Multiple Choice

The coefficient of determination, R², demonstrates that beta

• A) has a low predictive power when applied to a portfolio of securities.
• B) is more effective when evaluating a portfolio rather than an individual security.
• C) is relatively unreliable when predicting the return fluctuation of a portfolio.
• D) generally explains 75% of the return fluctuation of an individual security.

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Definitions:

Direct Approach

A communication style that involves straightforwardly and clearly expressing thoughts or demands without unnecessary detail or diversion.

Social Media Environment

Pertains to the platforms and context in which social interactions, content sharing, and communication occur online.

Rumours

Unverified pieces of information or stories shared among people, not necessarily based on fact.

Negative Information

Information that portrays drawbacks, disadvantages, or adverse outcomes related to a subject or situation.