Question

ou expect General Motors (GM) to have a beta of 1.6 over the next year and the beta of Exxon Mobil (XOM) to be 0.7 over the next year. Also, you expect the volatility of General Motors to be 40% and that of Exxon Mobil to be 45% over the next year. Which stock has more systematic risk

Answer 1

Answer: General Motors (GM)

Explanation:

The beta is a measure of the Systematic risk that a security holds. The higher the beta, the more Systematic risk the security has. Market Beta is 1 so anything above 1 is considered to have more Systematic risk than the Market.

General Motors here has a higher beta than Exxon Mobil so has more Systematic risk than Exxon.