Beta is a measure of the extent to which:
A)the returns on the stock market as a whole change over time.
B)a security's risk can be eliminated by proper diversification.
C)the returns on a given stock move with the stock market.
D)a security's risk can be eliminated by random diversification.

Question

Quizplus · Accepted Answer

Beta measures the extent to which the returns on a given stock move with the stock market. A beta greater than one suggests the stock is more volatile than the market, while a beta less than one suggests it is less volatile than the market. Beta plays an important role in portfolio diversification and risk management.

Beta Is a Measure of the Extent to Which