Which of the following is true regarding the beta coefficient?
A) It is a measure of unsystematic risk.
B) A beta greater than one represents lower systematic risk than the market.
C) Generally speaking, the higher the beta the higher the expected return.
D) A beta of one indicates an asset is totally risk-free.
E) The risk premium of an asset will increase if the beta of that asset decreases.

Question

Quizplus · Accepted Answer

Beta is a measure of the systematic risk of a security or a portfolio in comparison to the market as a whole. A higher beta indicates higher risk, but also implies a higher expected return as compensation for that risk.

Which of the Following Is True Regarding the Beta Coefficient