The measure of systematic risk is called ________.
A)correlation
B)covariance
C)variance
D)beta

Question

Quizplus · Accepted Answer

The measure of systematic risk is called beta. Beta measures the degree of sensitivity of a stock's returns to the overall market returns. It is a measure of market risk or systematic risk, which cannot be diversified away. A beta of 1 indicates that the stock's returns move in tandem with the market, while a beta greater than 1 indicates that the stock is more volatile than the market, and a beta less than 1 indicates that the stock is less volatile than the market.

The Measure of Systematic Risk Is Called ________