If a stock's beta is .8 during a period when the market portfolio was down by 10%,then,a priori,we could expect the return on this individual stock to:
A) lose more than 10%.
B) lose, but less than 10%.
C) gain more than 10%.
D) gain, but less than 10%.

Question

Quizplus · Accepted Answer

A beta of 0.8 indicates that the stock is less volatile than the market, so it should decrease less than the market. Therefore, we can expect the stock to lose, but less than 10%.

If a Stock's Beta Is