- CFA Exams
- CFA Level I Exam
- Study Session 9. Equity Valuation (1)
- Reading 25. Return Concepts
- Subject 3. The required return on equity - the CAPM approach

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**CFA Practice Question**

Which statement(s) is (are) true regarding adjusted Beta?

II. If the historical beta is greater than 1, the adjusted beta (as calculated by the Blume's equation) will be more than the historical beta.

I. The mean-reverting level of the beta is 0.

II. If the historical beta is greater than 1, the adjusted beta (as calculated by the Blume's equation) will be more than the historical beta.

Correct Answer: None of them

I. It is 1. II. It will be less than the historical beta.

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