Question

1. Closed-end investment companies with beta coefficients less than 1.0 a. have outperformed the market b....

1. Closed-end investment companies with beta coefficients less than 1.0

a.

have outperformed the market
b.

have underperformed the market
c.

have more systematic risk than the market
d.

have less systematic risk than the market

2. Beta coefficients of 0.95 indicate

a.

the stock is less volatile than the market
b.

the stock has more unsystematic risk
c.

the stock has less unsystematic risk
d.

the stock is more volatile than the market
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Homework Answers

Answer #1

1. Closed-end investment companies with beta coefficients less than 1.0 have less systematic risk than the market.

Option d is correct

Beta is a measure of systematic risk. A beta higher than 1 indicates higher risk and less than 1 indicates lower risk.

2. Beta coefficients of 0.95 indicates the stock is less volatile than the market.

A beta less than 1 indicates lower risk. Lower risk indicates less volatility. Hence a beta of .95 indicates that the stock is less risky and less volatile.

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