Which one of the following stocks would NOT likely have a beta close to 1?
A)A stock that is part of the most dominant industry.
B)A stock that has a very high capitalization.
C)A newly listed stock.
D)The stock of a well-established firm.

Question

Quizplus · Accepted Answer

Beta measures the volatility or systematic risk of a stock compared to the overall market. A newly listed stock, which has not yet had sufficient time to establish its market position and performance, is likely to have higher volatility and a higher beta. Therefore, it would not likely have a beta close to 1. The other options, a stock in a dominant industry, a high capitalization stock, and the stock of a well-established firm, are more likely to have a beta close to 1 as they have a more stable market position and performance.

Which One of the Following Stocks Would NOT Likely Have