The beta of a security captures the security's ________ to market risk.
A) performance
B) required return
C) sensitivity
D) expected return

Question

Quizplus · Accepted Answer

Beta is a measure of sensitivity that captures how much a security's returns move in response to market risk or volatility. A beta of 1 indicates that the security's returns are perfectly in sync with the market, while a beta greater than 1 suggests that the security is more volatile than the market, and a beta less than 1 indicates that the security is less volatile than the market. Thus, choice C is the correct answer.

The Beta of a Security Captures the Security's ________ to Market