For a risky security to have a positive expected return but less risk than the overall market, the security must have a beta: A)of zero. B)that is 0 but 1. E)that is infinite.

Question

For a risky security to have a positive expected return but less risk than the overall market, the security must have a beta:
A)of zero.
B)that is > 0 but < 1.
C)of one.
D)that is > 1.
E)that is infinite.

Quizplus · Accepted Answer

A beta greater than 0 but less than 1 indicates that the security is less volatile than the market, which means it has less risk than the overall market while still having a positive expected return.

For a Risky Security to Have a Positive Expected Return