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Ipatiy [6.2K]
3 years ago
10

A stock with a beta equal to −1.0 has zero systematic (or market) risk. a. True b. False

Business
1 answer:
Advocard [28]3 years ago
8 0
The statement above is FALSE.
A stock with a beta equal to -1 does not have zero systematic risk. 
Systematic risk refers to the uncertainty that is inherent to the entire stock market segment; it is made up majorly of the daily fluctuations in the price of stocks. Beta is the measure of the systematic risk of a stock in comparison to the market as a whole. Beta is also used to compare a stock market risk to that of other stocks.
 A stock with a beta value of -1 indicates that the stock price will be less volatile than the market. A stock with a beta value of 1 indicates that the stock price will move with the market.
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