By definition,which of the following is correct regarding the beta of the market?
A)The market beta will depend on the composition of the market portfolio and could be greater than or less than 1.
B)The market beta will be less than 1 as the market portfolio is generally more diversified than an individual's portfolio.
C)The market beta will be equal to 1 given that it is the portfolio containing all assets.
D)The market beta will be great than 1 as the market portfolio is generally more diversified than an individual's portfolio.B

Question

Quizplus · Accepted Answer

The market beta is defined as 1 because it serves as the benchmark for comparing the volatility of individual stocks or portfolios. A beta of 1 indicates that the security's price will move with the market.

By Definition,which of the Following Is Correct Regarding the Beta