The beta of Southeast has been estimated to be 0.85. Which of the following statements about Southeast is FALSE? Question 9 options: If the market falls by 1%, Southeast would be expected to fall by 0.85%. The sign of the covariance between Southeast and the market is greater than zero. Southeast is considered to be less risky compared to the market. The covariance between Southeast and the market divided by the variance of the market is equal to 0.85. If the market rises by 1%, Southeast would be expected to rise by 1.85%.

The beta of Southeast has been estimated to be 0.85. Which of the following statements about Southeast is FALSE? Question 9 options: If the market falls by 1%, Southeast would be expected to fall by 0.85%. The sign of the covariance between Southeast and the market is greater than zero. Southeast is considered to be less risky compared to the market. The covariance between Southeast and the market divided by the variance of the market is equal to 0.85. If the market rises by 1%, Southeast would be expected to rise by 1.85%.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter3: Risk And Return: Part Ii

Section: Chapter Questions

Problem 2Q: Security A has an expected rate of return of 6%, a standard deviation of returns of 30%, a...

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	If the market falls by 1%, Southeast would be expected to fall by 0.85%.
	The sign of the covariance between Southeast and the market is greater than zero.
	Southeast is considered to be less risky compared to the market.
	The covariance between Southeast and the market divided by the variance of the market is equal to 0.85.
	If the market rises by 1%, Southeast would be expected to rise by 1.85%.