Answer:
Option A, 20% more, is the right answer.
Explanation:
Given the beta value of stock A = 1.2
The beta value of stock B = 1
The beta value of stock A is greater than the stock B. Here, we can see that the beta of stock A is large by 20% as compared to the beta of stock B.
It can be calculated as = (Beta of stock A – Beta of stock B) / Beta of stock B
= (1.2 – 1) / 1
= 0.2 or 20%
Therefore, the return will also be more than 20%.
Thus, option A. 20% more is correct.
