In the context of finance, the term 'beta' refers to:

Question

(a) The process of simultaneous buying and selling of an asset from different platforms.

(b) An investment strategy of a portfolio manager to balance risk versus reward.

(c) A type of systemic risk that arises where perfect hedging is not possible.

(d) A numeric value that measures the fluctuations of a stock to changes in the overall stock market.

Comments

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Answer 1

Answer:(d) A numeric value that measures the fluctuations of a stock to changes in the overall stock market.

Explanation:

Beta is a measure of a stock's sensitivity to market movements. It quantifies the relationship between the price movement of an individual stock and the overall market. A stock with a beta greater than 1 is expected to be more volatile than the market, while a stock with a beta less than 1 is expected to be less volatile.

Beta is used by investors and analysts to assess the risk associated with a particular stock or portfolio. It helps in understanding how much a stock's price is likely to move in relation to the broader market. A high beta indicates a higher level of risk, as the stock tends to fluctuate more in response to market movements. On the other hand, a low beta suggests lower volatility and potentially less risk.