Which of the Following Statements Is CORRECT

question 7

Multiple Choice

Which of the following statements is CORRECT?

• A) the characteristic line is the regression line that results from plotting the returns on a particular stock versus the returns on a stock from a different industry.
• B) the slope of the characteristic line is the stock's standard deviation.
• C) the distance of the plot points from the characteristic line is a measure of the stock's market risk.
• D) the distance of the plot points from the characteristic line is a measure of the stock's diversifiable risk.
• E) "characteristic line" is another name for the security market line.

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Definitions:

P-value

The probability of finding the observed, or more extreme, results when the null hypothesis of a study question is true.

Null Hypothesis

A hypothesis used in statistical testing that assumes there is no significant difference or effect, serving as the premise to be tested against the alternative hypothesis.

Null Hypothesis

A statement used in hypothesis testing that assumes there is no significant difference or effect and that any observation is due to chance.

Alternative Hypothesis

A theory that proposes there is a statistically significant relationship between two variables, contrasting the null hypothesis.