Question

An investor's portfolio has a beta coefficient of 0.85. If the overall market declined by 10% over the course of a year, the portfolio's value has likely

Answer 1

Answer: decreased by 8.5%

Explanation:

The beta coefficient of a stock is simply used to measure the volatility of a stock which is relative to the market.

From the question, we are informed that investor's portfolio has a beta coefficient of 0.85 and that the overall market declined by 10% over the course of a year.

Based on the information above, the value of the portfolio would have decreased by:

= 0.85/10

= 0.085

= 8.5%