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Suppose that the market portfolio is equally likely to increase by 24% or decrease by 8%.Security "X" goes up on average by 29% when the market goes up and goes down by 11% when the market goes down.Security "Y" goes down on average by 16% when the market goes up and goes up by 16% when the market goes down.Security "Z" goes up on average by 4% when the market goes up and goes up by 4% when the market goes down.
-The beta for security "Y" is closest to:
A)-1.00.
B)-0.25.
C)0.00.
D)0.25.

Question

Quizplus · Accepted Answer

Beta measures a security's sensitivity to market movements. Security Y moves inversely to the market: it decreases when the market increases and increases when the market decreases, indicating a negative beta. The magnitude of these movements suggests a beta close to -1.00.

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