Final answer:
The market beta is equal to one if a firm's stock returns covary identically with returns to a marketwide portfolio, signifying that the stock moves with the market.
option d is the correct
Step-by-step explanation:
If a firm's stock returns covary identically with returns to a marketwide portfolio, then its market beta from such a regression is equal to one. The beta (β) measures the volatility or systemic risk of a security or a portfolio in comparison to the market as a whole.
A beta of one indicates that the price of the security moves with the market. If the beta is greater than one, the security is theoretically more volatile than the market; if it's less than one, it is less volatile. Beta with a value of zero indicates no correlation with the market.