When the stock market has bottomed out and is beginning to recover, the best portfolio to own is the one with a beta of
A) 0.0.
B) +0.5.
C) +1.5.
D) +2.0.

Question

Quizplus · Accepted Answer

A portfolio with a beta of +2.0 is most advantageous when the stock market is recovering because it implies the portfolio's returns are expected to move twice as much as the market. This means if the market is going up, the portfolio's value should increase at double the rate, offering higher returns during a recovery phase.

When the Stock Market Has Bottomed Out and Is Beginning