A beta of 1.0 is the the beta of the ________, while a beta of 0.0 is the measure for a ________.
A) risk-free security, single security held on its own.
B) market, single security held on its own.
C) risk-free security, market.
D) market, risk-free security.

Question

Quizplus · Accepted Answer

A beta of 1.0 is the measure for the market, meaning that the security's performance is closely correlated with the overall market. A beta of 0.0 is the measure for a risk-free security, indicating that the security's return is not correlated with the market, and it is held on its own. Choice D correctly identifies the beta measures for both the market (beta of 1.0) and a risk-free security (beta of 0.0).

A Beta of 1