Explain what beta measures and how investors can use beta
What will be an ideal response?
Answer: Students should mention some or all of the following.
• Beta measures nondiversifiable (market) or systematic risk.
• Beta measures how a security will perform in relation to the market.
• The higher the beta, the riskier the security.
• The beta for the market is 1; stocks may have positive or negative betas.
• Stocks with betas greater than 1 are more responsive to changes in the market than is the market.
• Beta is derived from the slope of the "characteristic line."
The CAPM shows that as beta increases, the required return for an investment increases.
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When a company has a counterbalancing error, the company should
A) not take any action if the financial statements are no longer being presented on a comparative basis. B) restate the financial statements to show the correct balances if the financial statements are presented on a comparative basis. C) discuss the error in the notes to the financial statement and restate the financial statements. D) a and b.
Inherent risks related to debt obligations primarily concern the authorization of debt, receipt of funds, recording debt transactions, and compliance with any debt covenants
a. True b. False Indicate whether the statement is true or false
The Fair Credit Reporting Act has to do with:
A) allowing consumers to get their own credit report at no cost once a year B) credit checks done by potential lenders. C) reports made by credit agencies. D) All of these.
Tusa Corporation is a manufacturer that uses job-order costing. The company closes out any overapplied or underapplied overhead to Cost of Goods Sold at the end of the year. The company has supplied the following data for the just completed year: Estimated total manufacturing overhead at the beginning of the year $638,250 Estimated direct labor-hours at the beginning of the year 37,000direct labor-hours Results of operations: Actual direct labor-hours 34,000direct labor-hoursManufacturing overhead: Indirect labor cost$148,000 Other manufacturing overhead costs incurred$450,000 Cost of goods manufactured$1,611,000 Cost of goods sold (unadjusted)$1,518,000 The adjusted Cost of Goods Sold for the year is:
A. $1,529,500 B. $1,518,000 C. $1,642,000 D. $1,506,500