Which of the following statements is true?
A)Beta is a measure of systematic risk reflecting the co-movement of the returns on a specific share with returns on shares in the same industry
B)Beta is a measure of unsystematic risk reflecting the co-movement of the returns on a specific share with returns on shares in the same industry.
C)Beta is a measure of unsystematic risk reflecting the co-movement of the returns on a specific share with returns on the market portfolio.
D)Beta is a measure of systematic risk reflecting the co-movement of the returns on a specific share with returns on the market portfolio.

Question

Quizplus · Accepted Answer

Beta is a measure of systematic risk because it reflects the co-movement of the returns on a specific share with returns on the market portfolio. It measures the volatility or risk of a stock relative to the overall market. A beta of 1 indicates that a stock's price will 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.

Which of the Following Statements Is True