Consider the Following Average Annual Returns for Stocks a and B

question 25

Multiple Choice

Consider the following average annual returns for Stocks A and B and the Market.Which of the possible answers best describes the historical betas for A and B?

• A) bA > +1; bB = 0.
• B) bA = 0; bB = -1.
• C) bA < 0; bB = 0.
• D) bA < -1; bB = 1.
• E) bA > 0; bB = 1.

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Definitions:

Shareholders

Individuals or entities that own one or more shares of stock in a corporation, making them partial owners of the company.

Receivables Turnover

A financial metric indicating how often a company collects its average accounts receivable within a certain period, measuring the efficiency of credit sales collection.

Profit Margins

A financial metric used to evaluate a company's financial health by revealing the percentage of revenue that exceeds the costs of goods sold.

Days' Sales

A financial metric that measures the average number of days it takes a company to convert its inventory into sales.