The beta of a security is calculated by:
A) dividing the covariance of the security with the market by the variance of the market.
B) dividing the correlation of the security with the market by the variance of the market.
C) dividing the variance of the market by the covariance of the security with the market.
D) dividing the variance of the market by the correlation of the security with the market.

Question

Quizplus · Accepted Answer

The beta of a security is calculated by dividing the covariance of the security's returns with the market's returns by the variance of the market's returns. This measures the security's sensitivity to market movements.

The Beta of a Security Is Calculated By