In the CAPM, If a Stock Has a Large Beta

question 12

Multiple Choice

In the CAPM, if a stock has a large beta coefficient, then

• A)the stock's return is less volatile than the market's average return.
• B)the stock's return is about as volatile as the market's average return.
• C)the stock's return is more volatile than the market's average return.
• D)the stock's risk is greater than its expected return.

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Definitions:

Bridge Circuit

A circuit that consists of four sections connected in series to form a closed loop.

D'Arsonval Shunt

A D'Arsonval shunt is a precision resistor used in conjunction with a D'Arsonval meter movement to allow the measurement of high currents by diverting some of the current away from the sensitive galvanometer coil.

Contact Resistance

The resistance to the flow of electricity encountered at the point where two conductive surfaces meet or connect.

Typical Impedance

A standard or average measure of the total resistance faced by current in an electrical circuit, combining both resistive and reactive elements.