2. Most stocks have betas in the range of zero to one.

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Question 31 pts

3. The APT (Arbitrage pricing Theory) is a single factor model. The CAPM (Capital Assets Pricing Model) proposes that the relationship between risk and return is more complex and may be due to multiple factors.

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Question 41 pts

4. To calculate a stocks beta, we run a regression line of past returns on the stock versus returns on the market. The regression line is called the characteristic line. The slope coefficient of the characteristic line is defined as the beta coefficient.

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Question 51 pts

5. At least 3 years of monthly returns or 1 year of weekly returns are used in calculating beta. Many analysts use 5 years of monthly returns.

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False