If a firm has a beta of 1.0, it is safe to make the following conclusion regarding the relative risk of the firm to the market risk in general:
A. The firm is about as risky as the market.
B. The firm is more risky than the market.
C. The firm is less risky than the market.
D. The beta of the firm does not allow any conclusion about relative risk.
Answer:A
If a firm has a beta of 1.0, it is safe to make the following conclusion regarding the relative risk of the firm to the market risk in general:
A. The firm is about as risky as the market. B. The firm is more risky than the market. C. The firm is less risky than the market. D. The beta of the firm does not allow any conclusion about relative risk.