Investors should recognize that betas are calculated using historical data and that past performance relative to the market average may not accurately predict future performance.

Question

Quizplus · Accepted Answer

Betas are calculated using historical data, which means it is based on past performance, and past performance may not accurately predict future performance. Therefore, investors should recognize this limitation and not rely solely on beta when making investment decisions.

Investors Should Recognize That Betas Are Calculated Using Historical Data