The average of beta values for all individual stocks is:
A) greater than 1.0; most stocks are aggressive.
B) less than 1.0; most stocks are defensive.
C) unknown; betas are continually changing.
D) exactly 1.0; these stocks represent the market.

Question

Quizplus · Accepted Answer

The average beta value for all individual stocks is exactly 1.0, as this is representative of the market. This is because the market's beta value is always set at 1.0, and all other individual stock beta values are compared to this benchmark. Therefore, the average of all beta values must also be 1.0.

The Average of Beta Values for All Individual Stocks Is