Beta measures:
A) the ability to diversify risk.
B) how an asset covaries with the market.
C) the actual return on an asset.
D) the standard deviation of the assets' returns.
E) All of

Question

Quizplus · Accepted Answer

Beta measures the degree of covariation between an asset and the market. It is used to estimate the systematic risk of an asset and it measures how much an asset's return moves in response to a change in the market return. Beta is not related to diversification, actual return, or standard deviation of returns.

Beta Measures