Question

2. Which of the following statements concerning beta is correct?

a. A stock with a beta of 0 is expected to provide a rate of return equal to the market portfolio

b. A stock with a beta equal to 1 has no risk

c. Stocks with negative betas have the least amount of risk FALSE

d. A stock with a beta greater than 1 is expected to be more volatile than the market portfolio

Answer #1

**According to CAPM,**

**market portfolio has beta = 1**

**Now if any stock has beta = 1, it indicates that if
market rises/falls by 1%, stock will also rises/falls by
1%**

**If beta is greater than 1, the rise/fall in stock will
be higher than market**

**If beta = 0, no market risk, it will provide rate of
return equal to risk free asset**

**If beta is negative, it will follow opposite relation
with market. if market rises, stock falls and vice
versa**

**correct
statement : d. A stock with a beta greater than 1 is expected to be
more volatile than the market portfolio**

**[[[]]]**

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c.
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QUESTION 17
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C
A stock’s reported beta coefficient is based on forecasted
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D
A stock with a beta coefficient greater than 1.0 is said to be
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E
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