The slope of the regression line that exhibits the past relationship between a stock's return and the market's return is the:
A)Security market line
B)Stock's Beta
C)Market risk premium
D)Stock's unique risk

Question

Quizplus · Accepted Answer

The slope of the regression line between a stock's return and the market return is known as the Beta of the stock. Beta measures the relative volatility of a stock in relation to the market. A beta of more than 1 means that the stock is more volatile than the market, whereas a beta of less than 1 means that the stock is less volatile than the market. Therefore, B is the best choice.

The Slope of the Regression Line That Exhibits the Past