Overall market are amplified for a given stock or investment

Assignment Help Financial Management

Reference no: EM131182590

Which of the following statements is FALSE?

A) Beta represents the amount by which risks that affect the overall market are amplified for a given stock or investment.

B) Beta is the expected percent change in the excess return of the security for a 1% change in the excess return of the market portfolio.

C) Beta measures the diversifiable risk of a security, as opposed to its market risk, and is the appropriate measure of the risk of a security for an investor holding the market portfolio.

D) It is common practice to estimate beta based on the historical correlation and volatilities.

Reference no: EM131182590

Questions Cloud

What would be the additional funds needed for coming year : Broussard Skateboard's sales are expected to increase by 15% from $8 million in 2013 to $9.2 million in 2014. Its assets totaled $4 million at the end of 2013. Baxter is already at full capacity, so its assets must grow at the same rate as projected ..

Valuation-convertible bond : You purchased one of Big Corp.’s 8%, 10-year convertible bonds at its $1,000 par value a year ago when the company’s common stock was selling for $20. Similar bonds without a conversion feature returned 12% at the time. What would your return have be..

Assets must grow at the same rate as projected sales : Broussard Skateboard's sales are expected to increase by 15% from $8 million in 2013 to $9.2 million in 2014. Its assets totaled $3 million at the end of 2013. Broussard is already at full capacity, so its assets must grow at the same rate as project..

Weighted average cost of capital is closest : Luther Industries has 25 million shares outstanding trading at $18 per share. In addition, Luther has $150 million in outstanding debt. Suppose Luther's equity cost of capital is 13%, its debt cost of capital is 7%, and the corporate tax rate is 40%...

Overall market are amplified for a given stock or investment : Beta represents the amount by which risks that affect the overall market are amplified for a given stock or investment. Beta is the expected percent change in the excess return of the security for a 1% change in the excess return of the market portfo..

Benefits-problems are associated with credit default swaps : What does the price movement of credit default swaps tell an investor about a particular issuer? Share real-world examples of how an investor can take advantage of the price movement of credit default swaps in designing a portfolio. What benefits and..

Assume that interest rate parity holds : Assume that interest rate parity holds. In the spot market 1 Japanese yen = $0.01, while in the 180-day forward market 1 Japanese yen = $0.0105. 180-day risk-free securities yield 1.35% in Japan. What is the yield on 180-day risk-free securities in t..

Issued two types of bonds-convertibles : Gregg Company recently issued two types of bonds. The first issue consisted of 20-year straight (no warrants attached) bonds with an 6% annual coupon. The second issue consisted of 20-year bonds with a 5% annual coupon with warrants attached. Both bo..

Calculate the firms new long-term debt added during the year : During the year, Belyk Paving Co. had sales of $2,396,000. Cost of goods sold, administrative and selling expenses, and depreciation expense were $1,429,000, $435,400, and $490,400, respectively. In addition, the company had an interest expense of $2..

User Account

All Pages