Which of the Following Methods Involves Calculating an Average Beta

question 3

Multiple Choice

Which of the following methods involves calculating an average beta for comparable firms and using that beta to determine a project's beta?

• A)Risk premium method
• B)Pure play method
• C)Accounting beta method
• D)CAPM method
• E)Discounted cash flow model

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Definitions:

Anticlines

Upwardly convex folds in rock layers that typically have the oldest layers at their core.

Synclines

geological features formed by the downward folding of rock layers, with younger rocks in the core of the fold.

Cleavage

The tendency of a mineral to break along flat, defined surfaces as a result of its crystal structure.

Axial Surfaces

Imaginary surfaces that divide a fold as evenly as possible, extending through the apex of each fold in stratified rock.