A stock's Beta measures the:
A)average return on the stock.
B)variability in the stock's returns compared to that of the market portfolio.
C)difference between the return on the stock and return on the market portfolio.
D)market risk premium on the stock.

Question

Quizplus · Accepted Answer

Beta measures the variability (or risk) of a stock's returns compared to that of the market portfolio. A beta of 1 indicates that the stock's returns are perfectly correlated with the market, while a beta of less than 1 indicates lower volatility and a beta of greater than 1 indicates higher volatility.

A Stock's Beta Measures The