Final Answer:
The given statement "Over time beta coefficients tend to approach the beta value of the market portfolio" is false. Thus the correct option is b) False.
Step-by-step explanation:
Beta coefficients measure an asset's volatility in relation to the market. The statement suggests that over time, beta coefficients tend to approach the beta value of the market portfolio, which isn't accurate. Betas are determined by an asset's historical data and its correlation with the market. They might fluctuate based on market conditions but don't necessarily converge towards the beta of the market portfolio over time.
Beta coefficients reflect the asset's unique risk profile compared to the market. They're not predetermined to converge to a specific value like the market portfolio's beta. Instead, they represent the asset's relative volatility and sensitivity to market movements.
Market portfolio beta is 1.0 by definition, representing the average risk of the market. However, individual asset betas might be higher, lower, or equal to 1.0, signifying higher volatility, lower volatility, or the same volatility as the market, respectively.
Assets can maintain consistent beta values or exhibit trends, but there's no inherent tendency for betas to universally move towards 1.0 or the beta of the market portfolio over time. Factors such as changes in the asset's risk profile, market dynamics, and economic conditions contribute to fluctuations in an asset's beta, but they do not guarantee a convergence towards the market portfolio's beta.
Thus the correct option is b) False.