A beta of 1.0 is the beta of the ________,while a beta of 0.0 is the measure for a ________.
A)risk-free security; single security held on its own
B)market; single security held on its own
C)risk-free security; market
D)market; risk-free security

Question

Quizplus · Accepted Answer

A beta of 1.0 represents the market, meaning the stock has the same volatility as the overall market. A beta of 0.0 means the stock has no correlation with the market or any other security, which is equivalent to a risk-free security. Therefore, the correct option is D, where a beta of 0.0 represents a risk-free security and a beta of 1.0 represents the market.

A Beta of 1