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Why Should an Investor Invest in a Negative-Beta Stock Knowing

question 33

Essay

Why should an investor invest in a negative-beta stock knowing that it will have an expected return lower than the risk-free rate?


Definitions:

Sarbanes-Oxley Act

U.S. federal law enacted to protect investors from fraudulent accounting activities by corporations. It mandates strict reforms to enhance financial disclosures and prevent accounting fraud.

Securities Fraud

A type of serious white-collar crime that can involve deceiving investors or manipulating financial markets.

Imprisoned

The state of being confined in a prison as a form of punishment for committing a crime or in detention while awaiting trial.

Exclusionary Rule

A legal principle in the United States that prohibits the use of evidence collected or analyzed in violation of the defendant's constitutional rights.

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