The Following Three Data Points Are Available

question 18

Multiple Choice

The following three data points are available.This is an example of a ________ cost.

• A)variable
• B)fixed
• C)mixed
• D)semivariable

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Definitions:

Beta

A measure of the volatility, or systemic risk, of a security or a portfolio in comparison to the market as a whole; it indicates the tendency of a security's returns to respond to swings in the market.

CAPM (Capital Asset Pricing Model)

A model used to determine the expected return on an investment based on its level of risk, as well as the risk-free rate of return and the expected market return.

Risk Premium

The extra return expected by an investor for holding a risky asset compared to a risk-free asset, as compensation for the higher risk.

Diversifiable Risk

A type of risk that can be reduced or eliminated from a portfolio by holding a variety of investments.