An asset with a beta of 0.5 has
A)5 percent more risk than a risk-free asset.
B)50 percent more risk than a risk-free asset.
C)half the nondiversifiable risk as a market portfolio.
D)5 times the nondiversifiable risk as a market portfolio.

Question

Quizplus · Accepted Answer

Beta measures the sensitivity of an asset's returns to the returns of the market portfolio. A beta of 0.5 indicates that the asset has half the nondiversifiable risk compared to the market portfolio, which has a beta of 1.

An Asset with a Beta of 0.5 Has