Which of the following statements is FALSE? There may be reasons to exclude cert

Question

Which of the following statements is FALSE?

There may be reasons to exclude certain historical data as anomalous when estimating beta.

If we use very old data to when estimating beta, they data may be unrepresentative of the current market risk of the security.

The beta estimated we obtain from linear regression can be very sensitive to outliers, which are returns of unusually small magnitude.

Many practitioners use adjusted betas, which are calculated by averaging the estimated beta with 1.0.

There may be reasons to exclude certain historical data as anomalous when estimating beta.

If we use very old data to when estimating beta, they data may be unrepresentative of the current market risk of the security.

The beta estimated we obtain from linear regression can be very sensitive to outliers, which are returns of unusually small magnitude.

Many practitioners use adjusted betas, which are calculated by averaging the estimated beta with 1.0.

Explanation / Answer

The answer of the above question is c i.e. The beta estimated we obtain from linear regression can be very sensitive to outliers, which are returns of unusually small magnitude as the beta estimation is required large magnitude instead of small magnitude.

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