OKAY stock has a beta of 0.8. The market as a whole is expected to decline by 12% thereby causing OKAY stock to
A) decline by 9.6%.
B) decline by 12.5%.
C) increase by 9.6%.
D) increase by 12%.

Question

Quizplus · Accepted Answer

The beta of a stock measures its volatility in relation to the market. A beta of 0.8 means the stock is expected to move 80% as much as the market. Therefore, if the market declines by 12%, OKAY stock is expected to decline by 0.8 * 12% = 9.6%.

OKAY Stock Has a Beta of 0