If a firm's expected returns are more volatile than the expected return for the market portfolio, it will have a beta less than 1.0.

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If a firm's expected returns are more volatile than the expected return for the market portfolio, it will have a beta greater than 1.0, as beta is a measure of relative volatility. A beta less than 1.0 indicates that the firm's expected returns are less volatile than the market portfolio.

If a Firm's Expected Returns Are More Volatile Than the Expected