How much should a security with a high variance of return and fi of 1 be expected to return?
A)The market rate of return
B)The risk- free rate of return
C)Nothing
D)None of the above

Question

Quizplus · Accepted Answer

A security with a beta (β) of 1 is expected to move in tandem with the market, hence it should return the market rate of return. Beta measures a security's sensitivity to market movements. A beta of 1 indicates that the security's price will move with the market.

How Much Should a Security with a High Variance of Return