A statistic known as a stock's beta coefficient measures:
A)total risk.
B)systematic or market risk.
C)unsystematic or business-specific risk.
D)None of the above

Question

Quizplus · Accepted Answer

A stock's beta coefficient measures its systematic or market risk, which is the risk associated with the market as a whole, rather than any specific business or economic factor. Beta is a measure of how much a stock's price fluctuates in relation to the overall market, with a beta of 1 indicating that the stock moves in line with the market, and a beta greater than 1 indicating that the stock is more volatile than the market as a whole. Beta is not a measure of total risk, as it does not take into account unsystematic or business-specific risk.

A Statistic Known as a Stock's Beta Coefficient Measures