Beta is a good measure of a stock's risk when the stock is combined into a portfolio.

Question

Quizplus · Accepted Answer

Beta is a measure of a stock's volatility in relation to the overall market. When combined into a portfolio, the beta of each individual stock can help calculate the overall risk of the portfolio. The higher the beta of the stocks in the portfolio, the higher the overall risk of the portfolio. Therefore, beta is a useful measure of risk when analyzing a portfolio.

Beta Is a Good Measure of a Stock's Risk When