You expect General Motors (GM)to have a beta of 1.5 over the next year and the beta of Exxon Mobil (XOM)to be 1.9 over the next year.Also,you expect the volatility of General Motors to be 50% and that of Exxon Mobil to be 35% over the next year.Which stock has more systematic risk? Which stock has more total risk?

Question

Quizplus · Accepted Answer

Systematic risk is measured by beta, with Exxon Mobil (XOM) having a higher beta (1.9) than General Motors (GM) at 1.5, indicating more systematic risk. Total risk includes both systematic and unsystematic risk and is often measured by volatility, with GM having a higher volatility (50%) than XOM (35%), indicating more total risk.

You Expect General Motors (GM)to Have a Beta of 1