Beta

Submitted by Sharemarket News on 19 April, 2011 - 14:22

Also referred to as "beta coefficient," beta is a number describing the relation of returns compared with that of the market. It measures an investment’s volatility and indicates sensitivity of a stock’s rate of return. For example, a beta higher than 1 means higher price volatility than market volatility. A beta below 1 means lower price volatility than the market. The beta coefficient is an important element in the Capital Asset Pricing Model (CAPM).

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