Asked by Shelby Wilcox on May 02, 2024
Verified
Explain in words what beta is and why it is important.
Beta
An indicator of the variability of a stock's performance compared to the general market, where a beta greater than 1 suggests a volatility superior to that of the market.
- Clarify and deliberate on the relevance of the beta coefficient in determining systematic risk.
Verified Answer
KB
Kimberly BradwayMay 07, 2024
Final Answer :
This is a concept check question that requires students to put into words that beta is a measure of systematic risk, the only risk an investor can expect to earn compensation for bearing. Beta specifically measures the amount of systematic risk an asset has relative to an average asset.
Learning Objectives
- Clarify and deliberate on the relevance of the beta coefficient in determining systematic risk.