CFA Practice Question

There are 294 practice questions for this study session.

CFA Practice Question

If a stock has a beta less than 1.0, it means ______

A. an investor can eliminate market risk through diversification.
B. an investor will earn a higher return on this stock than one on the market portfolio.
C. the stock's return is less volatile than the market portfolio.
Correct Answer: C

Because the overall market has a beta of 1.0, a stock with a beta that is less than 1.0 is less volatile than the market portfolio (M).

User Contributed Comments 2

User Comment
GouldenOne ??????
SKIA GouldenOne -- Beta > 1 equals stock is more volatile than market; Beta < 1 equals stock is less volatile than market; Beta = 1 stock is as volatile as the market
You need to log in first to add your comment.