The amount of systematic risk present in a particular risky asset, relative to the systematic risk present in an average risky asset, is called the particular asset's:
A) Beta coeﬃcient.
B) Reward to risk ratio.
C) Law of One Price.
D) Diversiﬁable risk.
E) Treynor index.

Question

Quizplus · Accepted Answer

The amount of systematic risk present in a particular risky asset, relative to the systematic risk present in an average risky asset, is measured by the beta coefficient. Beta measures the asset's sensitivity to movements in the overall market. An asset with a beta of 1 is considered to have the same systematic risk as the overall market, while an asset with a beta greater than 1 is considered to have higher systematic risk and an asset with a beta less than 1 is considered to have lower systematic risk.

The Amount of Systematic Risk Present in a Particular Risky