Two Stocks That Have the Same Beta ____ Have the Same

question 38

Multiple Choice

Two stocks that have the same beta ____ have the same correlation because _______:

• A)may; because correlation measures the sensitivity of the S&P to the market portfolio.
• B)will; because correlation measures the tightness of fit around the regression line.
• C)may not; because correlation measures the tightness of fit around the regression line.
• D)may not; because correlation measures the sensitivity to change.
• E)None of the above.

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Definitions:

Inflation

The rate at which the general level of prices for goods and services is rising, leading to a decrease in purchasing power of the currency.

Budget Shortfalls

A financial situation where projected spending exceeds the revenues or funds available, often leading to the necessity for cuts or borrowing.

Hyperinflation

An extremely high and typically out-of-control inflation rate, where the prices of goods and services rise rapidly, eroding currency value.

Printing More Money

The action taken by a country's central bank to increase the money supply, often leading to inflation if not managed properly.