Asked by Ashley Mercado on Jun 23, 2024
Verified
A stock's beta measures:
A) its performance.
B) market risk.
C) volatility in the overall market.
D) its return on investment.
Market Risk
The risk of losses in investments caused by factors that affect the entire market, such as economic changes or political events.
Beta
An assessment tool for determining the comparative volatility or systematic risk of a portfolio or security against the market at large.
Volatility
Volatility is a statistical measure of the dispersion of returns for a given security or market index, indicating the degree of variation from the average over a certain period.
- Understand the concept of beta and its significance in measuring a stock's market risk.
Verified Answer
TD
Taylor DombalisJun 30, 2024
Final Answer :
B
Explanation :
Beta measures a stock's sensitivity to changes in the overall market. It indicates the level of risk associated with investing in that stock compared to the market as a whole. A high beta means the stock is more volatile, while a low beta means the stock is less volatile. Beta is not a measure of performance or return on investment.
Learning Objectives
- Understand the concept of beta and its significance in measuring a stock's market risk.