Multiple choice

A fund has Beta of greater than 1. This means

  1. the fund is more volatile than the market

  2. the fund is as volatile as the market

  3. the fund is less volatile than the market

  4. none of the above
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A Correct answer
Explanation

Beta measures a fund's volatility relative to the market. A beta greater than 1 indicates the fund is more volatile than the market benchmark - it will tend to move more (both up and down) than the market. Beta equal to 1 means same volatility as market, while beta less than 1 means lower volatility.

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