The beta of a security is equal to _________.
A) the covariance between the security and market returns divided by the variance of the market's returns
B) the covariance between the security and market returns divided by the standard deviation of the market's returns
C) the variance of the security's returns divided by the covariance between the security and market returns
D) the variance of the security's returns divided by the variance of the market's returns

Question

Quizplus · Accepted Answer

Beta is a measure of systematic risk of a security in relation to the market. It is calculated as the covariance between the security and market returns divided by the variance of the market's returns. Option A is the accurate definition of beta.

The Beta of a Security Is Equal to _________