The beta of a security measures Blank______. Multiple choice question. the responsiveness of the security's return to the return on the market as a whole the responsiveness of the security's total risk to the return on the market as a whole the correlation between the security and the risk-free rate the responsiveness of the security's unsystematic risk to the return on the market as a whole

The beta of a security measures Blank______. Multiple choice question. the responsiveness of the security's return to the return on the market as a whole the responsiveness of the security's total risk to the return on the market as a whole the correlation between the security and the risk-free rate the responsiveness of the security's unsystematic risk to the return on the market as a whole

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 10MC

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Similar questions

What is security Market Line (SML)? How it explains risk-return relationship? Explain different scenarios where the changes in SML occurs?
Define the real risk-free rate (r*). What security canbe used as an estimate of r*? What is the nominalrisk-free rate (rRF)? What securities can be used asestimates of rRF?
Solve both questions with explanation
Changing the market risk premium A. Changes neither the y-intercept nor the slope of the security market line B. Changes only the y-intercept of the security market line C. Changes only the slope of the security market line D. Changes both the y-intercept and the slope of the security market line
A change in the risk premium, E(Rm) - Rf, results in... Group of answer choices 1. A change in the vertical intercept of the Security Market Line (SML) 2. No change in the return/beta relationship. 3. A change in the horizontal intercept of the Security Market Line (SML) 4. A change in the slope of the Security Market Line (SML)
8. Fluctuations of a security's return that are due to market-wide news representing common risk is the ________. A. Idiosyncratic risk B. Systematic risk C. Unique risk D. Unsystematic risk
A change in the risk premium, E(Rm) - Rf, results in... a) A change in the vertical intercept of the Security Market Line (SML) b) No change in the return/beta relationship. c)A change in the horizontal intercept of the Security Market Line (SML) d)A change in the slope of the Security Market Line (SML)
Which is least likely correct about security valuation?a. The calculated or determined value considers the stream of future cash flows.b. The calculated or determined value equals the market price.c. The calculated or determined value considers the risks involved and the opportunity cost.d. The calculated or determined value allows the investors to evaluate whether a security isovervalued or undervalued.e. All of the above
An increase in the riskiness of a particular security would NOT affect: Select one: A. The risk premium for that security B. The premium for expected inflation C. The total required return for the security D. Investors' willingness to buy the security
The market efficiency hypothesis claims that, as a rule, the market value and intrinsic value of a security are equal. True False.
Determine how the appropriate yield to be offered on a security is affected by a higher risk-free rate. Explain the logic of this relationship. . Determine how the appropriate yield to be offered on a security is affected by a higher default risk premium. Explain the logic of this relationship.
What type of risk is the risk that belongs to the market as a whole? Systematic risk Unsystematic risk (or nonsystematic risk) Total risk