The higher a stock's beta,the
A)higher its expected return.
B)higher its market risk.
C)lower its random risk.
D)lower its required return.

Question

Quizplus · Accepted Answer

Beta measures a stock's market risk, or systematic risk, which is the risk that cannot be diversified away. Therefore, the higher a stock's beta, the higher its market risk. It does not necessarily mean a higher expected return, lower random risk, or lower required return.

The Higher a Stock's Beta,the