Bank K is conservatively managed. It benefits slightly when general economic conditions are very favorable and is hurt slightly when general economic conditions are very unfavorable. Its beta would likely be
A)less than zero.
B)zero.
C)between zero and 1.00.
D)greater than 1.00.

Question

Quizplus · Accepted Answer

Bank K is conservatively managed, which means it has a low level of systematic risk compared to the overall market. Therefore, its beta should be between zero and 1.00. The slight benefits and hurts that it experiences in very favorable or unfavorable economic conditions suggest that its systematic risk is less than the market, but not negligible. Therefore, the correct answer is C.

Bank K Is Conservatively Managed