Which of the following is the best definition of beta coefficient?
A) Amount of systematic risk present in a particular risky asset relative to an average risky asset.
B) Group of assets such as stocks and bonds held by an investor.
C) The difference between the return on a risky investment and a risk-free investment
D) Return on a risky asset expected in the future.
E) Equation of the SML showing the relationship between expected return and beta.

Question

Quizplus · Accepted Answer

The beta coefficient measures the amount of systematic risk present in a particular risky asset relative to that in an average risky asset. It is a key concept in the Capital Asset Pricing Model (CAPM), which describes the relationship between systematic risk and expected return for assets.

Which of the Following Is the Best Definition of Beta