A stock with a beta of 2.0 would be a _______ stock.

A stock with a beta of 2.0 is classified as a high-risk stock because beta measures the sensitivity of a stock's returns in relation to the overall market movements. A beta of 1.0 indicates that the stock's price moves in line with the market; if the market goes up or down by 1%, the stock is expected to do the same. When a stock has a beta greater than 1.0, such as 2.0, it indicates that the stock is expected to move twice as much as the market. Therefore, if the market increases or decreases by 1%, the stock is expected to increase or decrease by 2%, which implies greater volatility and higher risk.

Investors consider stocks with a high beta more speculative because they are subject to larger price swings, and while they may offer the potential for higher returns, they also carry the risk of more significant losses. Thus, identifying a stock with a beta of 2.0 as high risk is accurate, reflecting the stock's volatility compared to the average market behavior.