For a stock with beta equal to 1.5 signifies that the stock has a 50% higher expected return than the average stock.

Name: For a stock with beta equal to 1.5 signifies that the stock has a 50% higher expected return than the average stock.
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Question

Quizplus · Accepted Answer

A stock with a beta of 1.5 signifies that it is 50% more volatile than the market, not that it has a 50% higher expected return. Beta measures the stock's sensitivity to market movements, not directly its expected return.

For a Stock with Beta Equal to 1