In normal market conditions if a security has a negative beta:
A)the security always has a positive return.
B)the security has an expected return above the risk-free return.
C)the security has an expected return less than the risk-free rate.
D)the security has an expected return equal to the market portfolio.
E)Both A and B.

Question

Quizplus · Accepted Answer

A security with a negative beta is expected to move in the opposite direction of the market. In normal market conditions, this means that the security's expected return is less than the risk-free rate, as it is less risky than the market as a whole. Therefore, choice C is the best answer.

In Normal Market Conditions If a Security Has a Negative