Beta is useful in the calculation of the:
A) company's variance.
B) company's discount rate.
C) company's standard deviation.
D) unsystematic risk.
E) company's market ratE.

Question

Quizplus · Accepted Answer

Beta is a measure of systematic risk, or the risk that cannot be diversified away. It represents the sensitivity of a company's stock price to market movements. Beta is used in the calculation of the company's discount rate, also known as the cost of equity, which reflects the return investors require to invest in the company. Therefore, the correct choice is B, the company's discount rate.

Beta Is Useful in the Calculation of The