QuestionMarch 20, 2026

We would generally find that the beta of a single security is more stable over time than the beta of a diversified portfolio. True False

We would generally find that the beta of a single security is more stable over time than the beta of a diversified portfolio. True False
We would generally find that the beta of a single security is more stable over time than the beta of a diversified
portfolio.
True
False

Solution
4.5(220 votes)

Answer

False Explanation 1. Understand beta stability Beta measures sensitivity to market movements. For a diversified portfolio, the composition changes less frequently, making beta more stable compared to a single security whose volatility and market relationship can change more over time. 2. Determine correctness The statement claims the opposite of reality. A diversified portfolio usually has a more stable beta than a single security.

Explanation

1. Understand beta stability <br /> Beta measures sensitivity to market movements. For a diversified portfolio, the composition changes less frequently, making beta more stable compared to a single security whose volatility and market relationship can change more over time. <br />2. Determine correctness <br /> The statement claims the opposite of reality. A diversified portfolio usually has a more stable beta than a single security.
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