Question: 7. One problem with a market risk analysis such as the one Kravitz is conducting relates to dif- ferences in reported market beta coefficients. Some

7. One problem with a market risk analysis such as the one Kravitz is conducting relates to dif- ferences in reported market beta coefficients. Some services calculate and report straight his- torical betas, while others make adjustments for the tendency of betas to approach 1.0 over time. A few services even attempt to include fundamental economic factors in their beta cal- culations. Explain why reported beta values (even pure historical betas) are so inconsistent. Do historical betas provide good measures of the future riskiness of firms (or divisions)

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