Q726
Betas tend to move towards 1.0 with passage of time are classified as
A.
standard betas
B.
varied betas
C.
historical betas
D.
adjusted betas
AnswerAnswer: Option D
Solution
Answer: Option D
Solution:
Betas tend to move towards 1.0 with passage of time are classified as adjusted betas. The Adjusted Beta is an estimate of a security's future Beta. Adjusted Beta is initially derived from historical data, but modified by the assumption that a security's true Beta will move towards the market average, of 1, over time.