A company has a beta of 1.0; if the market goes down by 8%, the value of the company's stock will: decline 8%. Option b) is the correct choice.
A beta of 1.0 indicates that a stock's price tends to move in line with the overall market. In this scenario, when the market experiences an 8% decline, a stock with a beta of 1.0 is expected to mirror that movement. Therefore, the value of the company's stock is likely to decline by 8% as well. Beta serves as a measure of systematic risk or volatility compared to the market, and a beta of 1.0 suggests the stock is expected to have the same level of volatility as the market.
Hence, if the market goes down by 8%, investors can anticipate a corresponding 8% decline in the value of the company's stock. The correct option is: b) decline 8%.