If the Reward-To-Risk Ratio of a Security Is Greater Than

question 23

Multiple Choice

If the reward-to-risk ratio of a security is greater than that supported by the security market line,then the security:

• A)is one which compensates investors for the total risk associated with that security
• B)is one which compensates investors for unsystematic risk
• C)is under-priced in the marketplace
• D)must have a beta which is greater than 1.0
• E)must be trading in a market which is strong-form efficient

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Definitions:

Cost Control Measures

Strategies and actions implemented by a business to monitor, manage, and minimize expenses to increase profitability.

Improve Control

Enhancing the mechanisms or strategies used to guide or manage operations, activities, or systems towards achieving desired objectives.

Technological Advancements

The introduction of new technologies or the improvement of existing technologies to enhance capabilities and efficiency.

Recruiting Quality Employees

The process of attracting and selecting individuals with the necessary skills and attributes to fulfill job roles effectively within an organization.