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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