If the beta of an individual share is 1.5,a change in the value of the market will cause the price of the share to change by 1.5 times the change in the market.

Question

Quizplus · Accepted Answer

This statement correctly describes the concept of beta – a measure of a stock's volatility relative to the overall market. A beta of 1.5 means that the stock is expected to move 1.5 times as much as the market, either up or down. For example, if the market moves up by 1%, the stock with a beta of 1.5 is expected to move up by 1.5%. Similarly, if the market moves down by 2%, the stock with a beta of 1.5 is expected to move down by 3%.

If the Beta of an Individual Share Is 1