ECONOMICS
RISK AND RETURN
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Variability or standard deviation of the investment returns.
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Investment return’s sensitivity to changes in the market’s returns
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Investmen return’s sensitivity to changes in interest rates.
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Weighted-average return of an investment portfolio
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Detailed explanation-1: -Beta () is a measure of the volatility-or systematic risk-of a security or portfolio compared to the market as a whole (usually the S&P 500). Stocks with betas higher than 1.0 can be interpreted as more volatile than the S&P 500.
Detailed explanation-2: -2. Beta. While standard deviation determines the volatility of a fund according to the disparity of its returns over a period of time, beta, another useful statistical measure, compares the volatility (or risk) of a fund to its index or benchmark.
Detailed explanation-3: -Beta is a concept that measures the expected move in a stock relative to movements in the overall market. A beta greater than 1.0 suggests that the stock is more volatile than the broader market, and a beta less than 1.0 indicates a stock with lower volatility.
Detailed explanation-4: -Beta could be calculated by first dividing the security’s standard deviation of returns by the benchmark’s standard deviation of returns. The resulting value is multiplied by the correlation of the security’s returns and the benchmark’s returns.
Detailed explanation-5: -Definition: Beta is a numeric value that measures the fluctuations of a stock to changes in the overall stock market. Description: Beta measures the responsiveness of a stock’s price to changes in the overall stock market.