gs1medium
In the context of finance, the term ‘beta’ refers to
- A.the process of simultaneous buying and selling of an asset from different platforms
- B.an investment strategy of a portfolio manager to balance risk versus reward
- C.a type of systemic risk that arises where perfect hedging is not possible
- D.a numeric value that measures the fluctuations of a stock to changes in the overall stock market
▶ Answer & Explanation
Correct answer: D. a numeric value that measures the fluctuations of a stock to changes in the overall stock market
Beta is a measure of a stock's volatility in relation to the overall market. A beta of 1 indicates that the stock's price tends to move with the market. A beta greater than 1 suggests the stock is more volatile than the market, while a beta less than 1 indicates it is less volatile. This metric helps investors understand the systematic risk associated with an investment.
Source: UPSC gs1 2023