Which of the following statements is true?
A)A shares with a beta less than zero has no exposure to systematic risk.
B)A shares with a beta greater than 1.0 has lower non-diversifiable risk than shares with a beta of 1.0.
C)A shares with a beta less than 1.0 has lower non-diversifiable risk than shares with a beta of 1.0.
D)A shares with a beta less than 1.0 has higher non-diversifiable risk than shares with a beta of 1.0.

Question

Quizplus · Accepted Answer

The beta coefficient measures the sensitivity of a company's stock price to the overall movement of the market. A shares with a beta of less than 1.0 has lower non-diversifiable risk than shares with a beta of 1.0, indicating that the stock is less volatile compared to the market as a whole. Therefore, option C is true. Option A is false because a negative beta means the stock moves in the opposite direction of the market. Option B and D are also false because a beta greater than 1.0 means the stock is more volatile compared to the market, and lower beta means less volatile.

Which of the Following Statements Is True