What is the most logical explanation for a +2.0% return on a stock with a Beta of 1.0 in a month where the market returned +1.0%?
A)The stock is aggressive
B)The market is undervalued
C)Favourable firm-specific news was reported
D)The Beta is incorrect

Question

Quizplus · Accepted Answer

A stock with a Beta of 1.0 is expected to move in line with the market. Therefore, if the market returned +1.0% in a month and the stock returned +2.0%, it suggests that there was favourable firm-specific news reported, which caused the stock to outperform the market.

What Is the Most Logical Explanation for a +2