In the Capital Asset Pricing Model, beta measures a stock's sensitivity to overall market returns.

Question

Quizplus · Accepted Answer

This is correct. Beta is used in the CAPM to measure the systematic risk or volatility of a stock compared to the overall market. A beta of 1 indicates the stock moves in line with the market, while a beta greater than 1 suggests the stock is more volatile than the market and a beta less than 1 suggests the stock is less volatile than the market.

In the Capital Asset Pricing Model, Beta Measures a Stock's