Which of the Following Statements Is Correct

question 121

Multiple Choice

Which of the following statements is correct?

• A)If a company with a high-beta stock merges with a low-beta company, the best estimate of the new merged company's beta is 1.0.
• B)The beta of an "average stock," or "the market," can change over time, sometimes drastically.
• C)If a newly issued stock does not have a past history that can be used as a basis for calculating beta, then we should always estimate that its beta will turn out to be 1.0. This is especially true if the company finances with more debt than the average firm.
• D)During a period when a company is undergoing a change such as increasing its use of leverage or taking on riskier projects, the calculated historical beta may be drastically different than the "true" or "expected future" beta.

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Definitions:

Trial Close

A sales technique where the salesperson asks the potential buyer questions that assume the sale has been made, to gauge their readiness to commit.

FAB Demonstration

A sales technique focusing on features, advantages, and benefits of a product to persuade potential buyers.

Response To The Stimulus

The reaction or change in behavior or action of an organism or system as a result of a specific external factor or stimulus.

Market Share

The portion of a market controlled by a particular company or product, often expressed as a percentage of total sales within the industry.