Finance term 'beta' — what it refers to
Question
In the context of finance, the term 'beta' refers to
Options
the process of simultaneous buying and selling of an asset from different platforms
an investment strategy of a portfolio manager to balance risk versus reward
a type of systemic risk that arises where perfect hedging is not possible
a numeric value that measures the fluctuations of a stock to changes in the overall stock market
Explanation
In corporate finance and investing, Beta (β) is a quantitative metric used to measure a stock's volatility (systematic risk) relative to the overall market. A beta greater than 1.0 indicates the stock is more volatile than the market, while a beta less than 1.0 indicates it is less volatile.
Answer: (d).
Question details
Year
2023
Paper
GS Paper 1
Question
Q73
Subject
Economy
Sub-topic
Financial Markets & Instruments
Type
Factual single
Difficulty
Medium
Nature
Static
Source hint
Capital Asset Pricing Model / Systematic Market Risk Beta
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