Why Should an Investor Invest in a Negative-Beta Stock Knowing

question 33

Essay

Why should an investor invest in a negative-beta stock knowing that it will have an expected return lower than the risk-free rate?

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Definitions:

Blue Jeans

Denim trousers that are typically dyed with indigo and have become a significant fashion item and symbol of Western culture.

Tax

Mandatory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund public expenditures.

Competitive Market

A market in which there are many buyers and sellers of the same good or service, none of whom can influence the price at which the good or service is sold.

Taxi Rides

Services offered by vehicles, typically cars, for hire to transport individuals from one location to another, based on a fare.