A security's beta coefficient will be negative if ________.
A) its returns are negatively correlated with market-index returns
B) its returns are positively correlated with market-index returns
C) its stock price has historically been very stable
D) market demand for the firm's shares is very low

Question

Quizplus · Accepted Answer

A negative beta coefficient means that the security's returns move in the opposite direction of the market-index returns. This indicates that the security is defensive and tends to perform well during market downturns. As a result, its beta coefficient will be negative if its returns are negatively correlated with market-index returns.

A Security's Beta Coefficient Will Be Negative If ________