If last month a stock with Beta of 1.0 lost two percent while the TSX 300 had a one percent gain, then it appears that:
A)beta has been calculated incorrectly.
B)the S&P 500 cannot represent the market.
C)betas are long-term "best fit" averages, not short-term stock measures.
D)the market index had a good month.

Question

Quizplus · Accepted Answer

Betas are long-term "best fit" averages and are not necessarily indicative of short-term movements. The fact that the stock with a beta of 1.0 lost two percent while the TSX 300 had a one percent gain in one month suggests that there could be short-term volatility or specific factors affecting the stock's performance.

If Last Month a Stock with Beta of 1