The purpose of adding an asset with a negative or low positive beta is to
A) reduce profit.
B) reduce risk.
C) increase risk.
D) increase profit.

Question

Quizplus · Accepted Answer

Adding an asset with a negative or low positive beta can help to reduce the overall risk of an investment portfolio. Beta measures the volatility of an asset in relation to the overall market. A negative beta asset will move in the opposite direction of the market, while a low positive beta asset will have less volatility than the market. By adding these types of assets, investors can diversify their portfolio and reduce the impact of market fluctuations on their overall returns.

The Purpose of Adding an Asset with a Negative or Low