Question

The ‘beta’ of the market portfolio (market index) is:

      a.   zero     b.   0.5      c.   1.0      d.   2.0   

	2.0
	1.0
	0.5
	zero

Answer 1

Beta represents the volatility in a stock when compared to the market index.

The beta of the market portfolio is 1.0.

Any stock which has a beta of more than 1 is considered to be more risky when compared with the market index. Similarly any stock which has a beta of less than 1 is considered to be less risky when compared with the overall market.

So, the correct answer is option c.

Feel free to ask in case of any query relating to this question