The relationship between the covariance of the security with the market to the variance is called the:
A) alpha.
B) beta.
C) total risk.
D) standard deviation.
E) expected return.

Question

Quizplus · Accepted Answer

The relationship between the covariance of the security with the market to the variance is called beta. This measures the systematic risk or volatility of a security in relation to the overall market. Alpha measures the excess return of a security compared to its expected return based on beta, while total risk combines systematic and unsystematic risk. Standard deviation measures the dispersion of a set of data points from the mean, and expected return is the anticipated return on an investment based on various factors.

The Relationship Between the Covariance of the Security with the Market