The beta of ABC Co. stock is the slope of
A) the security market line.
B) the characteristic line for a plot of returns on the S&P 500 versus returns on short-term Treasury bills.
C) the arbitrage pricing line.
D) the line of best fit for a plot of ABC Co. returns against the returns of the market portfolio for the same period.

Question

Quizplus · Accepted Answer

Beta is a measure of systematic risk and is calculated as the slope of the line of best fit for a plot of an asset's returns against the returns of the market portfolio for the same period. Therefore, the correct choice is D.

The Beta of ABC Co