The beta of a security is calculated by:
A)dividing the covariance of the security with the market by the variance of the market.
B)dividing the correlation of the security with the market by the variance of the market.
C)dividing the variance of the market by the covariance of the security with the market.
D)dividing the variance of the market by the correlation of the security with the market.
E)None of the above.

Question

Quizplus · Accepted Answer

Beta is the measure of systematic risk of a security in relation to the market. It is calculated as the covariance of the security with the market divided by the variance of the market. Option A matches this definition, making it the correct choice.

The Beta of a Security Is Calculated By