In the CAPM, If a Stock Has a Beta Coefficient

question 40

Multiple Choice

In the CAPM, if a stock has a beta coefficient near one, 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:

Depolarization

A reversal in the electrical potential across a cell's plasma membrane, leading to the initiation of an action potential or nerve impulse.

Sodium Ions

Positively charged atoms of sodium, crucial for maintaining fluid balance and transmitting nerve impulses in the body.

Potassium Ions

Electrolytes with a positive charge found inside and outside of cells, essential for maintaining normal cell function including nerve impulse transmission and muscle contraction.

Excitation-Contraction Coupling

Stimulation of a muscle fiber produces an action potential that results in contraction of the muscle fiber.