BLANK 1 OPTIONS: Systematic or Unsystematic

A stock's contribution to the market risk of a well-diversified portfolio is called the Capital Asset Pricing Model (CAPM), this risk can be measured by a metric called the beta coefficient, which calculates the degree to which a stock moves with the movements in the market. risk. According to Based on your understanding of the beta coefficient, indicate whether each statement in the following table is true or false: Statement True False A stock that is more volatile than the market will have a beta of more than 1.0 Stock A's beta is 1.0; this means that the stock moves in the same direction and magnitude as the market. Higher-beta stocks are expected to have lower required returns There are different ways of calculating the beta coefficient for a stock. Using the information given in the following table, calculate the beta coefficient of Stock j: Data Stock j's standard deviation Market's standard deviation Correlation between Stock j and the market 42.00% 38.40% 0.78 Beta coefficient of Stock j: 0.85 1.28 1.02 0.72