If a stock's Beta is.8 during a period when the market portfolio was down by 10%, then, a priori, we could expect the return on this individual stock to:
A)lose more than 10%.
B)lose, but less than 10%.
C)gain more than 10%.
D)gain, but less than 10%.

Question

Quizplus · Accepted Answer

A Beta of .8 indicates that the stock is less volatile than the market. Therefore, we would expect the stock to lose less than the market, but still lose value due to the negative market sentiment. The exact amount of the loss cannot be determined with the information given, but it will likely be less than 10%.

If a Stock's Beta Is