Beta measures depend highly on the:
A) direction of the market variance.
B) the overall cycle of the market.
C) the variance of the market and asset, but not their co-movement.
D) the standard deviation of the security and the market and how they are correlated.

Question

Quizplus · Accepted Answer

Beta measures the volatility of an asset in relation to the overall market. It is calculated using the covariance between the asset and the market, as well as the variance of the market. Therefore, it depends on the standard deviation (a measure of volatility) of both the security and the market, and importantly, on how these two are correlated.

Beta Measures Depend Highly on The