Question

Which of the following statements is FALSE? Explanation: B. Beta is measured using past information.

A. One difficulty when trying to estimate beta for a security is that beta depends on the correlation and volatilities of the security's and market's returns in the future.
B. It is common practice to estimate beta based on the expectations of future correlations and volatilities.
C. One difficulty when trying to estimate beta for a security is that beta depends on investors' expectations of the correlation and volatilities of the security's and market's returns.
D. Securities that tend to move less than the market have betas below 1.

Answer 1

Option B => It is common practice to estimate beta based on the expectations of future correlations and volatilities.

Step-by-step explanation:

Option B is the correct answer that is, ''It is common practice to estimate beta based on the expectations of future correlations and volatilities".

To a layman or scientist, Beta means a Greek word but come to Economics and financial accounting, beta is something related to stock.

Beta is mainly used in the Calculation or determination of risk associated with a particular stock. The Calculations of the fluctuations of stocks in market is what is known as Beta. The predictive Vale of Beta is limited therefore,it is based on past infomation.