A stock with a defensive beta, lower than 1, has a required return that is:
A) less than the risk-free rate.
B) between the risk-free rate and the market return.
C) equal to the market return.
D) greater than the market return.

Question

Quizplus · Accepted Answer

Stocks with a defensive beta (beta lower than 1) are expected to be less volatile than the market. Therefore, their required return is typically between the risk-free rate and the market return, reflecting their lower risk compared to the overall market.

A Stock with a Defensive Beta, Lower Than 1, Has