If last month a stock with Beta of 1.0 lost two percent while the TSX 300 had a one percent gain, then it appears that:
A)Beta has been calculated incorrectly
B)The S&P 500 cannot represent the market
C)Betas are long-term "best fit" averages, not short-term stock measures
D)The market index had a good month

Question

Quizplus · Accepted Answer

Betas are long-term "best fit" averages, meaning they represent the historical relationship between a stock's returns and the market's returns over an extended period of time. In this case, a one-month period may not be indicative of the stock's overall beta, and it is possible for a stock with a beta of 1.0 to underperform or outperform the market in any given month.

If Last Month a Stock with Beta of 1