You Have the Following Data on (1)the Average Annual Returns

question 33

Multiple Choice

You have the following data on (1) the average annual returns of the market for the past 5 years and (2) similar information on Stocks A and B.Which of the possible answers best describes the historical betas for A and B?

• A) bA > 0;bB = 1.
• B) bA > +1;bB = 0.
• C) bA = 0;bB = -1.
• D) bA < 0;bB = 0.
• E) bA < -1;bB = 1.

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Definitions:

Production Function

A mathematical model that describes the maximum output that can be achieved with a given set of inputs, reflecting the technological relationship between inputs and outputs.

Factors Of Production

The inputs used in the production of goods or services in the attempt to make an economic profit. These include land, labor, capital, and entrepreneurship.

Input

Resources used in the production process to produce goods or services, such as labor, raw materials, and capital.

Output

The amount of goods or services produced by a company, industry, or economy.