If the Beta of the Market Index Is 1 and the Standard

question 42

Multiple Choice

If the beta of the market index is 1 and the standard deviation of the market index increases from 12% to 18%, what is the new beta of the market index?

• A) .8
• B) 1
• C) 1.2
• D) 1.5

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Definitions:

Investment Banks

Financial institutions that provide advisory services, underwriting, trading, asset management, and other financial services to corporations and governments.

Direct Transfers

The process of moving assets or funds without the involvement of an intermediary, from one party directly to another.

Maturity Matching

The idea that the maturity of financing should match the duration of the project being financed.

Financing

The process of providing funds for business activities, making purchases, or investing.