In normal market conditions or when the market is rising if a security has a negative beta:
A) the security always has a positive return.
B) the security has an expected return above the risk-free return.
C) the security has an expected return less than the risk-free rate.
D) the security has an expected return equal to the market portfolio.

Question

Quizplus · Accepted Answer

A negative beta indicates that the security's returns are expected to move inversely to the overall market returns. Therefore, when the market is rising, a security with a negative beta is expected to have a return less than the risk-free rate, as it moves in the opposite direction of the market.

In Normal Market Conditions or When the Market Is Rising