ECONOMICS
RISK AND RETURN
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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coefficient correlation
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coefficient of variation
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beta
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standard deviation
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Detailed explanation-1: -The beta of a stock or portfolio will tell you how sensitive your holdings are to systematic risk, where the broad market itself always has a beta of 1.0. High betas indicate greater sensitivity to systematic risk, which can lead to more volatile price swings in your portfolio, but which can be hedged somewhat.
Detailed explanation-2: -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).
Detailed explanation-3: -The Beta factor describes the movement in a stock’s or a portfolio’s returns in relation to that of the market returns. For all practical purposes, the market returns are measured by the returns on the index (Nifty, Mid-cap etc.), since the index is a good reflector of the market.
Detailed explanation-4: -The Beta is the best measure for estimating the risk of an investment belonging to a diversified portfolio. It allows the investor to quantify the volatility of the security held in the portfolio compared with the market risks.