Any change in its beta is likely to affect the required rate of return on a stock, which implies that a change in beta will likely have an impact on the stock's price, other things held constant.

Question

Quizplus · Accepted Answer

Beta is a measure of a stock's volatility in relation to the overall market. A higher beta means higher risk but also potentially higher returns. As the required rate of return is calculated based on the risk and return expectations, any change in the beta will change the required rate of return, ultimately impacting the stock's price. Thus, a change in beta is likely to affect the stock's price, other things being equal.

Any Change in Its Beta Is Likely to Affect the Required