Empirical results estimated from historical data indicate that betas ________.
A) are always close to zero
B) are constant over time
C) of all securities are always between zero and 1
D) seem to regress toward 1 over time

Question

Quizplus · Accepted Answer

Empirical results suggest that betas tend to regress toward 1 over time, meaning they move closer to the market average. Betas can be greater than 1 or less than 0, but they tend to regress toward 1 in the long run. Betas are not always close to zero or constant over time, and they can be greater than 1 or less than 0.

Empirical Results Estimated from Historical Data Indicate That Betas ________