You expect General Motors (GM)to have a beta of 1.3 over the next year and the beta of Exxon Mobil (XOM)to be 0.9 over the next year.Also,you expect the volatility of General Motors to be 40% and that of Exxon Mobil to be 30% over the next year.Which stock has more systematic risk? Which stock has more total risk?

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Quizplus · Accepted Answer

GM has more systematic risk because it has a higher beta (1.3 vs. 0.9), indicating it's more sensitive to market movements. GM also has more total risk due to its higher volatility (40% vs. 30%).

You Expect General Motors (GM)to Have a Beta of 1