A beta coefficient of 1.2 implies
1) the stock is more risky than the market
2) the stock's return is 1.2 times the return on the market
3) the stock is less risky than the market
4) the market's return is 1.2 times the return on the stock
A)1 and 2
B)1 and 4
C)2 and 3
D)3 and 4

Question

A beta coefficient of 1.2 implies​
1) the stock is more risky than the market
2) the stock's return is 1.2 times the return on the market
3) the stock is less risky than the market
4) the market's return is 1.2 times the return on the stock
A)​1 and 2
B)​1 and 4
C)​2 and 3
D)​3 and 4

Quizplus · Accepted Answer

A beta coefficient of 1.2 implies that the stock is more risky than the market (as beta measures systematic risk) and the stock's return is 1.2 times the return on the market (as beta is a measure of the stock's sensitivity to market movements). Option 3 and 4 are incorrect.

A Beta Coefficient of 1.2 Implies​

A Beta Coefficient of 1.2 Implies