The average of Beta values for all individual stocks is:
A)greater than 1.0; most stocks are aggressive.
B)less than 1.0; most stocks are defensive.
C)unknown; Betas are continually changing.
D)exactly 1.0; these stocks represent the market.

Question

Quizplus · Accepted Answer

The Beta for the market is defined as 1.0. Therefore, if the average Beta for all individual stocks is exactly 1.0, it means that these stocks represent the market. It is important to note that Betas can change over time, but the current average would still be 1.0 if it represents the entire market.

The Average of Beta Values for All Individual Stocks Is