By definition, what is the beta of the average asset equal to?Multiple choice question.210
Question
By definition, what is the beta of the average asset equal to?Multiple choice question.210
Solution
The beta of the average asset, by definition, is equal to 1. This is because beta measures the volatility or systematic risk of an individual security or an industrial sector in comparison to the market as a whole. And the market has a beta of 1. Therefore, if an asset is average, it would have the same systematic risk as the market, hence a beta of 1.
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