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“A negative unlevered beta will prompt investors to invest in the stock when prices are expected to decline.”
sir i want to understand two things in this, one how can unlevered or asset beta in other words can be negative? Two, why will an unlettered beta cause the investors to dive in when price are expected to sag?
You cannot expect me to keep explaining statements that you are quoting from some book or other. By all means ask me to explain things you are not clear about from my lectures or in past exam questions, but not from other peoples books!!
You will not find negative asset betas occurring in the exam. The only examples that occurs in real life are companies involved in (for example) gold mining. Gold prices move tend to move in the opposite direction than ‘normal’ share prices because people buy gold as a ‘safe haven’ when other investments are falling in value. I do mention this in my lectures!!!
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