Question

1) If a stock’s price in general decreases, when the stock market goes up, but yet the stock’s price does not decrease as much as the stock market increases, the stock’s beta must be:

Group of answer choices

negative.

between -1 and zero.

between zero and 1.

larger than 1.

2) If a stock’s price in general increases, when the stock market goes up, but yet the stock’s price does not increase as much as the stock market does, the stock’s beta must be:

Group of answer choices

Less than zero.

Between zero and 1.

Zero.

larger than 1.

Answer 1

Answer : Correct option is between -1 and zero.

Reason :

A Negative Beta menasthat there is inverse relation between the market and stock price.In the above case , it is given If a stock’s price in general decreases, when the stock market goes up , then there is inverse relatioship and also it moves steadily as compared to market,therefore the stock’s beta must be between -1 and zero.

Answer : Correct option is between zero and 1

Reason :

A Postive Beta menasthat there is positive relation between the market and stock price.In the above case , it is given a stock’s price in general incraeses, when the stock market goes up , then there is positive relatioship and also it moves steadily as compared to market,therefore the stock’s beta must be between less than 1 or between zero and 1