Question 19: Which of the following statements is false? A It is common practice to estimate beta based on the historical correlation and volatilities B. Beta measures the diversifiable risk of a security, as opposed to its market risk, and is the appropriate measure of the risk of a security for an investor holding the market portfolio C. Beta represents the amount by which risks that affect the overall market are amplified for a given stock or investment. D. Beta is the expected percent change in the excess return of the security for a 1% change in the excess return of the market portfolio Question 20: Use the following information to answer the question(s) below. Consider the following information regarding corporate bonds: Rating AAA AA A BBB BB B CCC Average Default Rate 0.0% 0.1% 0.2% 0.5% 2.2% 5.5% 12.2% Recession Default Rate 0.0% 1.0% 3.0% 3.0% 8.0% 16.0% 48.0% Average Beta 0.05 0.05 0.05 0.10 0.17 0.26 0.31 Wyatt Oil has a bond issue outstanding with seven years to maturity, a yield to maturity of 7.0%. and a BBB rating. The corresponding risk-free rate is 3% and the market risk premium is 5%. Assuming a normal economy, the expected return on Wyatt Oil's debt is closest to: I A.4.9% B.5.5% C.3.0% D.3.5%