Which of the following statements best summarizes the conclusions reached regarding the stability of betas?
A) Betas for individual securities and large portfolios are unstable.
B) Betas for individual securities are unstable.
C) Betas for individual securities and large portfolios are stable.
D) Betas for large portfolios are unstable.

Question

Quizplus · Accepted Answer

Betas for individual securities are generally considered unstable due to various factors such as changing market conditions, company-specific events, and the time period over which they are measured. Large portfolios, on the other hand, tend to have more stable betas because diversification reduces the impact of individual security volatility.

Which of the Following Statements Best Summarizes the Conclusions Reached