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Kaskin, Incorporated, stock has a beta of 1.2, and Quinn, Incorporated, stock has a beta of 0.6. Which of the following statements is most accurate?

A) Kaskin stock is less volatile
B) Quinn stock is more volatile
C) Quinn stock is less volatile
D) Both stocks have the same volatility

User Giftcv
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Final answer:

Beta measures a stock's volatility relative to the market. Kaskin's beta of 1.2 indicates it's more volatile, while Quinn's beta of 0.6 signifies it is less volatile; thus, Quinn stock is less volatile.

Step-by-step explanation:

The question is related to the concept of beta, which is a measure of the volatility—or systematic risk—of a security or a portfolio in comparison to the market as a whole. The beta of a stock is an indication of how much the stock's price movement is expected to respond to swings in the overall market. A beta value above 1 signifies that the stock is more volatile than the overall market, while a beta value below 1 indicates that the stock is less volatile.

Considering that Kaskin, Incorporated, has a beta of 1.2, it implies that it is expected to be 20% more volatile than the market. On the other hand, Quinn, Incorporated, has a beta of 0.6, which implies it is expected to be 40% less volatile than the market. Therefore, the most accurate statement is C) Quinn stock is less volatile.

User AutomationAndy
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