The XYZ stock has a beta of 167 and the ABC stock has a beta

The XYZ stock has a beta of 1.67, and the ABC stock has a beta of 0.6. An aggressive investor would prefer XYZ. True or false?

Solution

True: The XYZ stock has a beta of 1.67, and the ABC stock has a beta of 0.6. An aggressive investor would prefer XYZ. True or false?

Beta represents systematic risk measure for the stock. Higher the beta more the systematic risk which stock carries. Beta higher than 1 is taken up by risk takers and beta lower than 1 is for risk averse investors. Hence, Beta of 1.67 will be taken up by aggressive investor.