Asked by Vonda Simpson on Apr 26, 2024
Verified
If the beta of the market index is 1 and the standard deviation of the market index increases from 12% to 18%, what is the new beta of the market index?
A) .8
B) 1
C) 1.2
D) 1.5
Market Index
A measurement of the performance of a specific "basket" of stocks considered to represent a particular market or sector.
Standard Deviation
A statistical measure of the dispersion or variability of a set of data points or investment returns.
- Comprehend the role of beta in determining the exposure to market-wide risk.
Verified Answer
JH
Joesph HickeyApr 30, 2024
Final Answer :
B
Explanation :
Market beta always equals 1 regardless of market volatility.
Learning Objectives
- Comprehend the role of beta in determining the exposure to market-wide risk.