A stock whose rate of return fluctuates less than the rate of return of a market portfolio will have a beta that equals
A)1)
B)less than 1.
C)more than 1.
D)Either A or C above

Question

Quizplus · Accepted Answer

Beta measures the extent to which a stock's rate of return fluctuates in response to changes in the market. A beta of 1 means that the stock's price is as volatile as the overall market. A beta less than 1 means that the stock is less volatile than the market, while a beta greater than 1 means that the stock is more volatile. Therefore, a stock whose rate of return fluctuates less than the rate of return of a market portfolio will have a beta less than 1.

A Stock Whose Rate of Return Fluctuates Less Than the Rate