Which of the Following Statements Is FALSE

question 49

Multiple Choice

Which of the following statements is FALSE?

• A)Beta measures the sensitivity of a security to market-wide risk factors.
• B)Volatility measures total risk,while beta measures only systematic risk.
• C)The beta is the expected percentage change in the excess return of the market portfolio for a 1% change in the excess return of a security.
• D)Utilities tend to be stable and highly regulated,and thus are insensitive to fluctuations in the overall market.

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Definitions:

Call Premium

The extra amount paid above the bond's face value for calling a bond before its maturity date, compensating the bondholder for early redemption.

Restrictive Covenants

Restrictive covenants are terms or conditions included in contracts or agreements that restrict or limit certain actions or behaviors to protect business interests.

Market Interest Rates

The prevailing rates at which interest is paid on borrowings or earned on investments in the financial market.

Call Features

Provisions embedded in financial instruments, like bonds, that allow the issuer to repurchase or redeem the instrument before its maturity date.