If the beta of a specific share is 1, what is the likely result of a 2 per cent increase in the market index return?
A) A 2 per cent increase in the return on the share
B) A 0.5 per cent decrease in the return on the share
C) A 2 per cent decrease in the return on the share
D) A 0.5 per cent increase in the return on the share

Question

Quizplus · Accepted Answer

A beta of 1 indicates that the share's returns move in line with the market index. Therefore, if the market index return increases by 2%, it is likely that the return on the share will also increase by 2%.

If the Beta of a Specific Share Is 1, What