The beta coefficient A stock’s contribution to the market risk of a well-diversified portfolio is called risk. It can be measured by a metric called the beta coefficient, which calculates the degree...



The beta coefficient








A stock’s contribution to the market risk of a well-diversified portfolio is calledrisk. It can be measured by a metric called the beta coefficient, which calculates the degree to which a stock moves with the movements in the market.





Based on your understanding of the beta coefficient, indicate whether each statement in the following table is true or false:






























Statement


True


False

Over time, a stock with a beta of 1.0 produces a return that goes up and down with a 1:1 relationship with the return on the market.



Beta measures the volatility in stock movements relative to the market.



A stock that is more volatile than the market will have a beta of less than 1.0.








Jun 10, 2022
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