One asset has a beta of 1.5 and another asset has a beta of 0.75.The difference in beta means that the asset with a beta of 0.75 has
A)75 percent less nondiversifiable risk than the asset with a beta of 1.5.
B)75 percent more nondiversifiable risk than the asset with a beta of 1.5.
C)twice as much nondiversifiable risk as the asset with a beta of 1.5.
D)one-half as much nondiversifiable risk as the asset with a beta of 1.5.

Question

Quizplus · Accepted Answer

A beta of 0.75 indicates that the asset has half the nondiversifiable risk compared to an asset with a beta of 1.5, as beta measures the asset's volatility relative to the market.

One Asset Has a Beta of 1