Which of the following is a characteristic of beta?

Question

Quizplus · Accepted Answer

Beta measures the volatility of returns on an individual security or portfolio relative to the returns of the overall market. A beta of less than 1.0 indicates that the security is less volatile than the market, while a beta of greater than 1.0 indicates greater volatility. A beta of 1.0 means that the security has the same volatility as the market. Option A is incorrect because beta can be calculated for individual stocks, not just bonds. Option B is incorrect because a beta of 1.0 simply indicates the security has the same volatility as the market, not zero risk. Option D is incorrect because a beta can be any number other than 1.0 depending on the security being analyzed.

Which of the Following Is a Characteristic of Beta