Which of the Following Is NOT a Potential Problem with Beta

question 23

Multiple Choice

Which of the following is NOT a potential problem with beta and its estimation?

• A) sometimes, during a period when the company is undergoing a change such as toward more leverage or riskier assets, the calculated beta will be drastically different than the "true" or "expected future" beta.
• B) the beta of "the market," can change over time, sometimes drastically.
• C) sometimes the past data used to calculate beta do not reflect the likely risk of the firm for the future because conditions have changed.
• D) there is a wide confidence interval around a typical stock's estimated beta.
• E) sometimes a security or project does not have a past history which can be used as a basis for calculating beta.

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Definitions:

Apraxia

A motor disorder caused by damage to the brain, resulting in difficulty with executing voluntary movements despite having the desire and physical ability to perform them.

Memory Impairment

A decline in the ability to remember information, which can occur due to various causes such as aging, neurological conditions, or injuries.

Compulsive Disorder

A mental disorder characterized by repetitive, unwanted thoughts (obsessions) and behaviors (compulsions) that the individual feels the urge to perform.

Clanging

A pattern of speech where words are chosen based on their sound rather than their meaning, often observed in psychiatric conditions.