Beta can be defined as the slope of the line that explains the relationship between
A) the return on a security and the return on the market.
B) the returns on a security and various points in time.
C) the return on stocks and the returns on bonds.
D) the risk free rate of return versus the market rate of return.

Question

Quizplus · Accepted Answer

Beta measures the volatility of a security or portfolio in comparison to the market as a whole, typically represented by a benchmark index. It is calculated as the covariance between the return of the asset and the return of the market divided by the variance of the market returns, essentially showing how much the asset's price moves relative to market movements.

Beta Can Be Defined as the Slope of the Line