Studies show that if a fund has a beta of 1.1 for year 1, a good forecast for the beta in year 2 is

Question

Quizplus · Accepted Answer

A beta of exactly 1.0 means that the fund has the same level of risk as the market, while a beta higher than 1.0 means it is more risky than the market. Since the fund has a beta of 1.1, it indicates that the fund is slightly more risky than the market. Assuming no major changes in the fund's strategy or market conditions, a good forecast for the beta in year 2 would be to remain relatively consistent at 1.1. Therefore, choice B (1.1) is the best answer.

Studies Show That If a Fund Has a Beta of 1.1