The stock of a silver mining company most likely has a:
A)zero inflation beta.
B)positive inflation beta.
C)beta that exactly matches the market beta.
D)negative inflation beta.
E)beta equal to the risk-free beta.

Question

Quizplus · Accepted Answer

A silver mining company is likely to have a positive inflation beta as the price of silver is strongly influenced by inflation. Inflation causes the value of currency to decrease, which can lead to an increase in the price of silver. Therefore, investors in silver mining companies should expect the stock to be positively correlated with inflation.

The Stock of a Silver Mining Company Most Likely Has