NACVA Exam CVA Topic 5 Question 77 Discussion

Actual exam question for NACVA's CVA exam

Question #: 77
Topic #: 5

[All CVA Questions]

It is possible (although not very common) for a security to have a negative beta (i.e. a beta less than zero). Such a beta would indicate that:

AIt is the result of aggressive securities

BBetas for small and publicly traded companies are often unreliable

CThe returns of these securities are countercyclical to the returns of the board investment market index.

DRisk-free return would be greater

Show Suggested Answer

Suggested Answer: D

by Merlyn at Dec 08, 2023, 10:53 PM

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1 days ago

So, would that mean option C is the correct answer?

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2 days ago

Ha! Imagine a security with a negative beta. That would be like investing in a perpetual motion machine. Gotta go with C on this one.

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5 days ago

That's right, it indicates countercyclical returns compared to the market index.

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8 days ago

I'm not sure about the specifics, but I know that negative betas are rare. Probably option C is the best choice here.

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9 days ago

Option C seems to be the correct answer. A negative beta indicates that the security's returns move in the opposite direction of the overall market.

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16 days ago

I think a negative beta means the security moves opposite to the market.

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