To Adjust Betas for the Future, Both Value Line and Merrill

question 58

Multiple Choice

To adjust betas for the future, both Value Line and Merrill Lynch assign the following weights to the historic beta and to the market:

• A) 66%, 34%
• B) 50%, 50%
• C) 80%, 20%
• D) 34%, 66%

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Definitions:

S&P 500

An index representing the performance of 500 large companies listed on stock exchanges in the United States.

Market Portfolio

A theoretical bundle of investments that includes every available asset in the market, weighted by market capitalization.

U.S. Securities

Financial instruments issued by the U.S. government, corporations or other entities, including stocks, bonds, and treasury securities.

World Equities

Refers to stocks and equity securities from companies around the globe, allowing investors to diversify their portfolio internationally.