Which of the following is correct regarding a change in beta and its potential impact on a stock's price?
A)Any change in beta is likely to affect the required rate of return on a stock, which implies that a change in beta will likely have an impact on the stock's price.
B)Any change in beta is not likely to affect the required rate of return on a stock. However, which implies that a change in beta will likely have an impact on the stock's price.
C)Any change in beta is likely to affect the required rate of return on a stock, which implies that a change in beta will likely not have an impact on the stock's price.
D)Any change in beta is not likely to affect the required rate of return on a stock, which implies that a change in beta will not likely have an impact on the stock's price.

Question

Quizplus · Accepted Answer

Beta is a measure of a stock's volatility in relation to the overall market. A higher beta indicates greater volatility and risk, while a lower beta implies less volatility and risk. The required rate of return on a stock is directly affected by its beta. Therefore, any change in beta is likely to affect the required rate of return, which, in turn, will have an impact on the stock's price.

Which of the Following Is Correct Regarding a Change in Beta