Which of the following statements about beta is correct?ACorrelation between a portfolio and the...

Which of the following statements about beta is correct?

A		Correlation between a portfolio and the market does not impact the calculation of beta.
B		The implications of beta are not affected by the coefficient of determination between a portfolio and the market.
C		Beta measures all types of risk
D		None of the above are correct.

Expert Solution

The Correct option is B. The implications of beta are not affected by the coefficient of determination between a portfolio and the market.

Coefficient of Determination = SSR / SST

SSR = Sum of squared regression
SST = Sum of squared total

The options A and C are incorrect.

Option A. Correlation between a portfolio and the market impacts the calculation of beta.

Option C . Beta does not measures all types of risk. It measures only systematic risk.

jeff jeffy answered 3 years ago

which of the following statements is correct? A. the beta of a portfolio of stocks is...

which of the following statements is correct? A. the beta of a portfolio of stocks is always smaller than the betas of any of the individual stocks B. If you found a stock with a zero historical beta and held it as the only stock in your portfolio, you would, by definition, have a riskless portfolio C. The beta coefficient of a stock is normally found by regressing past returns on a stock against past market returns. One could also...

Which of the following statements about the relationship between perfect competition and efficiency is NOT correct?...

Which of the following statements about the relationship between perfect competition and efficiency is NOT correct? (a) In the short run, and assuming no other externalities, a perfectly competitive industry achieves allocative efficiency: that is, it produces the quantity which maximizes short-run gains from trade. (b) In the long run, and assuming no other externalities, a perfectly competitive industry with free entry achieves productive efficiency: that is, output is produced at minimum average cost. (c) In the long run, a...

18 Which of the following statements is most correct? The variance of a portfolio is a...

18 Which of the following statements is most correct? The variance of a portfolio is a weighted average of asset variances. The benefits of diversification are greatest when asset returns have zero correlations. The market portfolio truly eliminates all unsystematic risk. Beta is the measure of an asset’s unsystematic risk.

Which one of the following statements is correct concerning the standard deviation of a portfolio? A....

Which one of the following statements is correct concerning the standard deviation of a portfolio? A. The greater the diversification of a portfolio, the greater the standard deviation of that portfolio. b. The standard deviation of a portfolio can often be lowered by changing the weights of the securities in the portfolio? c. Standard deviation is used to determine the amount of risk premium that should apply to a portfolio. d. Standard deviation measures only the systematic risk of a...

Which of the following statements about the cost of capital is CORRECT ?

Which of the following statements about the cost of capital is CORRECT ?Select one:a. Both the cost of debt and equity financing will decrease when a firm expands into a risky new area.b. Both the cost of debt and equity financing will decrease when a nuclear plant company encounters a ban on nuclear power generation in certain states.c. The WACC of a firm will decrease when investors become more risk averse.d. Both the cost of debt and equity financing will...

Which of the following statements about valence electrons is correct?

Which of the following statements about valence electrons is correct? Li has 1 valence electron and S has 6 valence electrons Mg has 12 valence electrons and O has8 valence electrons K has 19 valence electrons and Cl has 17 valence electrons Al has 13 valence electrons and C has 12 valence electrons Li has 3 valence electrons and Na has 11 valence electrons

Which of the following statements is CORRECT about a yield curve?

Which of the following statements is CORRECT about a yield curve? a. A yield curve reflects the relationship between bond yields and the inflation rate. b. A humped yield curve reflects interest rates lower than short term maturities. c. A normal yield curve is generally humped. d. An upward sloping yield curve is referred to as abnormal or inverted. e. A downward sloping yield curve is referred to as abnormal or inverted

1. Which of the following statements about beta diversity is TRUE? A. Beta diversity does not...

1. Which of the following statements about beta diversity is TRUE? A. Beta diversity does not change when you measure it at different scales B. All else being equal, generalists are more likely to be common when beta diversity is high C. Homogenous landscapes tend to have high beta diversity D. Topographically diverse, heterogenous landscapes tend to have high beta diversity 2. Which of the following statements about species-accumulation curves is TRUE? A. Only gamma diversity can be estimated using...

Which of the following statements is not correct about cholesterol? a. it is an essential component...

Which of the following statements is not correct about cholesterol? a. it is an essential component of cell membranes b. it is the precursor of steroid hormones c. it is soluble in non-polar solvents d. it is soluble in polar solvents Which intermolecular force exists between all molecules regardless of polarity? Which of the following compounds exhibits primarily dipole-dipole intermolecular forces? a. CH3-O-CH3 b. CH3CH3 c. CO2 d. F2

Which one of the following statements is correct about hypothesis testing?

Question