The beta coefficient: A. is a standardized measure of the risk per unit of retur

ID: 2740529 • Letter: T

Question

The beta coefficient:

A. is a standardized measure of the risk per unit of return.

B. measures the tendency of two stocks’ returns to move together.

C. is a metric that shows the extent to which a given stock’s returns move up and down with the stock market portfolio.

D. measures that part of a security’s risk associated with random events that can be eliminated by proper diversification.

E. is a metric that shows the tendency of a given stock’s returns to move up and down with government bonds.

The beta coefficient is

a metric that shows the extent to which a given stock’s returns move up and down with the stock market portfolio.

Beta is calculated as = Covariance of stock returns and market returns/Variance of market returns

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