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Answer: A stock with a more stable return than the market as a whole.
## Explanation A beta close to zero indicates a stock with a more stable return than the market as a whole. Beta is a measure of a stock's volatility in comparison to the market as a whole: - **Beta = 1**: Stock moves with the market - **Beta < 1**: Stock is less volatile than the market - **Beta > 1**: Stock is more volatile than the market - **Beta ≈ 0**: Stock has very low correlation with market movements, indicating more stable returns ### Why other options are incorrect: **Choice A**: Incorrect - A beta close to zero actually indicates more stability, not less stability. **Choice C**: Incorrect - While bond ETFs may have low betas, this doesn't define what a beta close to zero indicates for stocks specifically. **Choice D**: Incorrect - Beta measures volatility/correlation, not historical returns. A low beta doesn't indicate higher historical returns.
Author: Tanishq Prabhu
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A beta close to zero indicates:
A
A stock with a less stable return than the market as a whole.
B
A stock with a more stable return than the market as a whole.
C
An ETF replicating the corporate bond market.
D
A stock with historically higher returns compared to the market as a whole.
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