Using the Market Model Instead of the Full Covariance Approach

question 39

Multiple Choice

Using the market model instead of the full covariance approach

• A) does not require the calculation of betas.
• B) requires less assumptions.
• C) less individual variances need to be estimated.
• D) requires less parameter estimate.

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Definitions:

Divestiture

The process of selling an asset, investment, or division of a company as a strategic move for growth or downsizing.

Wholly Owned Subsidiary

A company whose entire stock is held by another company, making it 100% owned by the parent company.

Targeted Share Repurchase

A strategy used by companies to buy back shares specifically from certain shareholders, often to avoid a takeover threat.

Supermajority

A requirement for a high percentage of votes, typically greater than a simple majority, to approve a proposal or motion.