In normal market conditions if a security has a negative beta:
A) the security always has a positive return.
B) the security has an expected return above the risk-free return.
C) the security has an expected return less than the risk-free rate.
D) the security has an expected return equal to the market portfolio.
E) Both the security always has a positive return; and the security has an expected return above the risk-free return.

Question

Quizplus · Accepted Answer

A negative beta means that the security moves in the opposite direction of the market. In a normal market, stocks tend to have positive beta values, so a negative beta implies that the stock is defensive and usually performs better in a bear market. However, it does not guarantee a positive return, and the expected return is lower than the risk-free rate as investors are willing to pay for safety during market downturns.

In Normal Market Conditions If a Security Has a Negative