The market value weighted average beta of firms included in the market index will always be _____________.
A) 0
B) between 0 and 1
C) 1
D) There is no particular rule concerning the average beta of firms included in the market index

Question

Quizplus · Accepted Answer

The market index represents the overall market, which is considered to have a beta of 1. Therefore, the market value weighted average beta of firms included in the index will also be 1.

The Market Value Weighted Average Beta of Firms Included in the Market