You have invested all of your retirement funds in your company's stock, which has a beta of 1.0. When you hear on the radio that the stock market is down 150 points, what should you expect from your company stock in your retirement plan?
A) Should be a great day, your stock should be up significantly.
B) Rats! Your company stock is likely down more than the market today.
C) Your company stock is likely down with the market today in similar proportion.
D) It's anyone's guess as the market does not move at all in relation to your company stock.

Question

Quizplus · Accepted Answer

Since the company's stock has a beta of 1.0, it tends to move with the market. Therefore, if the market is down, it's likely that the company's stock is also down in a similar proportion.

You Have Invested All of Your Retirement Funds in Your