All else the same, an increase in the riskiness of a stock as measured by its beta will result in a ____ stock price

Question

Quizplus · Accepted Answer

The beta of a stock measures its riskiness relative to the overall market. A higher beta indicates that the stock is more volatile and risky compared to the market. Investors require higher returns to compensate for the risk, resulting in a lower stock price. Therefore, an increase in the beta of a stock will lead to a lower stock price, all else the same.

All Else the Same, an Increase in the Riskiness of a Stock