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Exam Financial-Management Topic 1 Question 75 Discussion

Actual exam question for WGU's Financial-Management exam
Question #: 75
Topic #: 1
What does a beta of less than 1 signify in the capital asset pricing model (CAPM)?

Suggested Answer: B Vote an answer

A beta less than 1 indicates that an investment has lower systematic risk than the overall market. Such securities tend to experience smaller fluctuations in response to market movements. Defensive stocks- such as utilities or consumer staples-often exhibit betas below one because their revenues are relatively stable across economic cycles. In CAPM, lower beta implies lower required return, reflecting reduced exposure to market-wide risk. Importantly, a beta below one does not mean the investment is risk-free; it still carries firm-specific (unsystematic) risk. Option B correctly describes the implication of a beta less than one within capital market theory.

by Henry at May 28, 2026, 01:13 PM

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Here are all the actual test exam dumps for IT exams. Most people prepare for the actual exams with our test dumps to pass their exams. So it's critical to choose and actual test pdf to succeed.

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