Question

A stock with a beta of 1.0 will: a. always generate a return equal to the market average. b. always generate a return that is close to the market average. c. always generate a return that is at least as large as the market average.. d. All of the above are correct. e. None of the above is correct.

Answer 1

Correct answer is A.

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Beta represents systematic risk of investment.

Beta of one means the return of the investment will move with the return of the market.

If the return of the market is 10%, then asset return will also be 10%.

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