Beta is the slope of a straight line that best fits the returns on an asset plotted against the return on [blank].
A)inflation
B)a portfolio of companies in the same industry
C)a broad market index
D)Treasury notes

Question

Quizplus · Accepted Answer

Beta measures a stock's volatility relative to the market as a whole, and therefore the return on a broad market index is the most appropriate choice for calculating a stock's beta. Inflation (A) and Treasury notes (D) are not directly related to a stock's volatility, and a portfolio of companies in the same industry (B) may not provide a broad enough representation of the overall market to accurately calculate beta.

Beta Is the Slope of a Straight Line That Best