Question

 The Beta coefficient is equivalent to risk, therefore a Beta of .98 indicates:
a) The lower the beta, the higher the risk
b) When the market grows, the asset decreases 2% less than the market
c) When the market grows, the financial asset grows 8% more than the market
d) The market grows and assets grow in the same proportion to 98%
e) ______________________________________________________________

Answer 1

Ans: if market grows the asset decreases 2% less than the market

Beta measures the relative risk associated with anu individual portfolio or security as measured in relation to the risk of market portfolio.

If beta>1 it indicates it's return tend to be more riskier than market.

If beta = 1 it indicates risk is similar to that of market portfolio

If beta <1 it indicates it is less riskier than market.

In the above case beta is less than 1 hence risk is lower than market which implies return will also be lower than market.