A stock's beta is a measure of its
A) unsystematic risk.
B) systematic risk.
C) company-unique risk.
D) diversifiable risk.

Question

Quizplus · Accepted Answer

Beta is a measure of the systematic risk of a stock, which is the risk that cannot be diversified away. The beta of a stock measures how much the stock's returns move in relation to the returns of the overall market. A beta of 1 indicates that the stock's returns move in line 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.

A Stock's Beta Is a Measure of Its