The Beta of a Security Is Calculated By

question 99

Multiple Choice

The beta of a security is calculated by:

• A)dividing the covariance of the security with the market by the variance of the market.
• B)dividing the correlation of the security with the market by the variance of the market.
• C)dividing the variance of the market by the covariance of the security with the market.
• D)dividing the variance of the market by the correlation of the security with the market.
• E)None of the above.

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Definitions:

Direct Labor-hours

The total hours of labor directly involved in manufacturing a product or providing a service, typically used as a basis for allocating overhead costs.

Manufacturing Overhead

All indirect costs associated with manufacturing, like utility costs for the factory, depreciation of manufacturing equipment, and factory management salaries.

Fixed Manufacturing Overhead

Costs in the manufacturing process that do not change with production volume, such as rent for the factory, salaries of permanent staff, and insurance.

Direct Labor-hours

The total hours worked directly on goods or services by employees, used to allocate labor costs to products or jobs.