A stock\'s contribution market risk of well-diversified portfolio is called risk

Question

A stock's contribution market risk of well-diversified portfolio is called risk. It can be measured by a metric called the beta coefficient which calculated the degree to which a stock moves with the movements in the market. Based on your understanding of the beta indicate whether each statement in the following table is true of false Stock A's beta is 1.0, this means that the stock has a negative correlation with the market. Beta coefficients are generally caucused using historical data. Higher-beta stocks are expected to higher required returns.

Explanation / Answer

A) Systematic Risk

Statement 1 : False - Stock with a beta of 1.0 has a positive correlation with market

Statement 2: True

Statement 3: True

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