Homework Answers
ANS- OPTION D
buying the company's shares is more risky than buying the entire stock Market
Beta signifies the volatility of the stock. beta of 1 signifies that the stock will move exactly the way index moves and will give the same amount of return as the index.
In the present question, beta is 2 which means that stock will have 2 time more volatality than the market. for ex. if market moves upwards 10% then stock will move 20% and if the market moves downwards 10% then the stock will move downward 20%. Therefore it is a risky proposition.
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