Which of the following statements concerning beta are correct?
I. Stock with high standard deviations of returns will always have high betas.
II. The higher the beta, the higher the expected return.
III. A beta can be positive, negative, or equal to zero.
IV. A beta of 0.35 indicates a lower rate of risk than a beta of 0.50.
A) II and III only
B) I and IV only
C) II, III and IV only
D) I, II, III and IV

Question

Quizplus · Accepted Answer

A beta of 0.35 indicates a lower rate of risk than a beta of 0.50 because beta measures the volatility of a stock relative to the market. A lower beta indicates that the stock is less volatile than the market, while a higher beta indicates that the stock is more volatile than the market.

Which of the Following Statements Concerning Beta Are Correct