Question
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 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 change in the overall stock market
Answer:
D
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Explanation:
In finance, the term "beta" refers to a measure of systematic risk or volatility of a stock or investment in relation to the overall market. It quantifies the sensitivity of a stock's price movements relative to the movements in a market index, such as the S&P 500.
A beta value greater than 1 indicates that the stock tends to move more than the market, while a beta less than 1 indicates that the stock tends to be less volatile than the market. A beta of 1 suggests that the stock moves in line with the market.