Question

A security with high beta (>1.0, high volatility) __________ the market when ___________ and _____________ the market when ___________. (vice versa with low beta)

A) Outperforms; the market is bullish; underperforms; the market is bearish
B) Outperforms; the market is bearish; underperforms; the market is bullish
C) Underperforms; the market is bullish; outperforms; the market is bearish
D) Underperforms; the market is bearish; outperforms; the market is bullish

Answer 1

A security with high beta outperforms the market when the market is bullish and underperforms the market when the market is bearish.

Step-by-step explanation:

A security with high beta (>1.0, high volatility) outperforms the market when the market is bullish and underperforms the market when the market is bearish. Conversely, a security with low beta (<1.0, low volatility) underperforms the market when the market is bullish and outperforms the market when the market is bearish.