A share has a beta of 1.3. The unsystematic risk of this share is ________ the stock market as a whole.
A)higher than
B)lower than
C)equal to
D)indeterminable compared to

Question

Quizplus · Accepted Answer

The beta of a share measures its systematic risk, which is the risk that is common to all stocks in the market. The unsystematic risk of a share is the risk that is specific to that share and is not related to the market as a whole. A share with a beta of 1.3 has a higher systematic risk than the stock market as a whole, which means that it is more likely to move in the same direction as the market. However, the unsystematic risk of this share is not specified in the question, so it is not possible to determine whether it is higher than, lower than, or equal to the unsystematic risk of the stock market as a whole.

A Share Has a Beta of 1