The ____ is an alternative way of representing the covariance of a security with the market portfolio.
A) random error term
B) security return coefficient
C) market return coefficient
D) beta coefficient

Question

Quizplus · Accepted Answer

The beta coefficient is the alternative way of representing the covariance of a security with the market portfolio. It measures the sensitivity of the security's returns to changes in the market returns. A beta of 1 indicates that the security has the same volatility as the market, while a beta of less than 1 implies lower volatility and a beta greater than 1 indicates higher volatility.

The ____ Is an Alternative Way of Representing the Covariance