The beta of an individual security is calculated by:
A)dividing the covariance of the security with the market by the variance of the market.
B)dividing the correlation of the security with the market by the variance of the market.
C)multiplying the variance of the market by the covariance of the security with the market.
D)multiplying the variance of the market by the correlation of the security with the market.
E)None of the above.

Question

Quizplus · Accepted Answer

The formula for beta is the covariance of the security with the market divided by the variance of the market. This measures the sensitivity of the security's returns to changes in the overall market.

The Beta of an Individual Security Is Calculated By