In a stock market, a riskier stock typically has:
A) a higher covariance with the market as a whole.
B) a lower covariance with the market as a whole.
C) a higher correlation with some stocks and a lower correlation with other stocks.
D) a lower correlation with the market as a whole.

Question

Quizplus · Accepted Answer

A riskier stock is typically more volatile and affected by market movements, therefore it will have a higher covariance with the overall market.

In a Stock Market, a Riskier Stock Typically Has