The beta coefficient is:

Question

Quizplus · Accepted Answer

The beta coefficient measures the relative volatility or systematic risk of a stock in comparison to the broader market. It is calculated as the covariance between the stock and the market, divided by the variance of the market. Therefore, it is a relative measure of stock-price variability. Option B is incorrect because the beta coefficient measures relative, not absolute, variability. Option C is incorrect because the beta coefficient is calculated as the covariance divided by variance, not standard deviation. Option D is incorrect because the beta coefficient is a valid option.

The Beta Coefficient Is