If a stock's returns are volatile, then the stock:
A)Cannot be considered a negative risk asset
B)Can still be considered a negative risk asset
C)Has macro risk, but no unique risk
D)Does not offer diversification potential

Question

Quizplus · Accepted Answer

A stock's volatility does not necessarily make it a negative risk asset. In fact, high volatility can present opportunities for investors who are willing to assume risk. Therefore, option B is correct as a stock can still be considered a negative risk asset even if its returns are volatile.

If a Stock's Returns Are Volatile, Then the Stock