You expect Wesfarmers (WES)to have a beta of 1 over the next year and the beta of Qantas (QAN)to be 1.2 over the next year. Also, you expect the volatility of WES to be 30% and that of QAN to be 40% over the next year. Which company has more systematic risk? Which company has more total risk?

Question

Quizplus · Accepted Answer

QAN has more systematic risk due to its higher beta of 1.2 compared to WES's beta of 1. Total risk is higher for QAN as well, due to its higher volatility of 40% compared to WES's 30%.

You Expect Wesfarmers (WES)to Have a Beta of 1 Over