The market surrogate is always assigned a beta of 1.0.

Question

Quizplus · Accepted Answer

Yes, the market surrogate (such as an index like S&P 500) is always assigned a beta of 1.0. This is because a beta of 1.0 indicates that the asset (or portfolio) in question moves in sync with the market, which is what the market surrogate represents. Assets with a beta greater than 1.0 are more volatile than the market, while those with a beta less than 1.0 are less volatile than the market.

The Market Surrogate Is Always Assigned a Beta of 1