Beta value, Financial Management

Beta Value

Risk is an important consideration while investing in any security. It is the possibility that realised returns will be less than the returns expected. The degree, to which different portfolios are affected by 'risk' as compared to the effect on the market as a whole, varies and is measured and calculated by 'Beta'. The Beta factor explains the movement in a stock's or a portfolio's returns in relation to that of the market returns.

 

Beta is given by:   

 

Beta        =      {Covariance (X, Y) / Variance (X)}

 

Where,           

'Y' is the returns on the security,

'X' is the market returns or index,

'Covariance' is a measure of how the two variables 'co-vary', and

'Variance' is the square of standard deviation.

Posted Date: 7/25/2012 8:56:01 AM | Location : United States







Related Discussions:- Beta value, Assignment Help, Ask Question on Beta value, Get Answer, Expert's Help, Beta value Discussions

Write discussion on Beta value
Your posts are moderated
Related Questions
What are the misconceptions about Financial Management?

QUESTION (a) List the five elements of the purchasing mix. (b) Describe briefly the four essential elements of a legally binding contract. (c) Distinguish between perform

Like corporate bonds, non-corporate bonds such as asset-backed securities, mortgage-backed securities, municipal bonds, sovereign bonds are also exposed to credit

This is the part of after-tax personal income that is not spent.

Explain the structure of financial systems In direct finance borrower-spenders borrow funds straight from lenders in the financial markets by selling them securities. In indire

What is Planning Internal auditors must plan the audit work so as to perform the audit in an effective manner.There must be sufficient audit programmes in existence which set o

The Project to be Addressed by the Paper: You have just graduated from CCI's MBA program and have secured a position as a fund manager for a well known investment banking house

Q. Function of the Investment decision? Investment decision related of the selection of the fixed assets. the assets can be acquired fall into two board groups i) long terms

In Time Series Analysis, we try to identify and determine the pattern of changes in the data collected over regular intervals of time. The data collected can be at a periodical int

Q. Show Function of the Financial decision? Financial decision: the second major decision is involved in financial management is the financial decision the investment decision