Question

beta of 1.0 is the beta of the ________, while a beta of 0.0 is the measure for a ________. market; single security held on its own market; risk-free security risk-free security; single security held on its own risk-free security; market

Answer 1

Market; risk free security

Step-by-step explanation:

Beta of an investment is the level of risk as a result of exposure to general market movements with negation to peculiar factors.

Beta of 1.0 is the beta of the market( this is the market with some

certain amount of risk), while a beta of 0.0 is the measure for a risk free security.

Answer 2

Beta of 1.0 is the beta of the market, while a beta of 0.0 is the measure for a risk-free security.

Step-by-step explanation:

Beta is the measure of the volatility of returns. It measures the systematic or market risk associated to a stock for any changes that affect the market as a whole. The market beta is always considered to be 1.0 and any stock having a beta higher than the market is more riskier than the market and any stock having a beta less than that of market's is less riskier than the market.

A risk free asset or rate is the rate that remains constant and has no volatility in returns. A risk free rate is usually assigned to short term government securities like T bills. As the risk free rate remains constant and no does not change with changes in market returns, beta of the risk free asset or security is always 0.0