Question

A stock's beta, which can be affected by surprise news or announcements, is a measure of its __________ in relation to a benchmark like an index fund

Answer 1

Answer:

volatility

Explanation:

Here are the options to this question

price

credit rating

yield

volatility

Beta measures the volatility or riskiness of a stock. The beta of the benchmark index fund is usually 1.

If the stock is more risky than the index fund, the beta would be greater than 1

If the stock is less risky than the index fund, the beta would be less than 1

The higher the beta, the higher the required return on the stock as investors would want to be compensated for bearing risk.