One would expect a stock with a beta of 1.25 to increase in returns
A)25 percent more than the market in up markets.
B)25 percent more than the market in down markets.
C)125 percent more than the market in up markets.
D)125 percent more than the market in down markets.

Question

Quizplus · Accepted Answer

A beta of 1.25 indicates that the stock is expected to move 25% more than the market in both up and down markets. Therefore, the correct answer is A, as the stock should increase by 25% more than the market in up markets.

One Would Expect a Stock with a Beta of 1