If Stock A is considered to be of average risk for the market and Stock B is also considered of average risk for the market, then the
A) standard deviation for each of the stocks will be equal
B) beta for each of the stocks will be equal
C) coefficient of variation for each of the stocks will be equal
D) cannot determine from the information given

Question

Quizplus · Accepted Answer

Beta is a measure of a stock's volatility in relation to the overall market. If both Stock A and Stock B are considered to be of average risk for the market, it implies that their betas would be equal, typically around 1, indicating their movements are closely aligned with the market's movements. The other options (standard deviation and coefficient of variation) relate to measures of risk and dispersion that can vary even among stocks with the same beta.

If Stock a Is Considered to Be of Average Risk