Beta value, Financial Management

Assignment Help:

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.


Related Discussions:- Beta value

What is the rationale of the double-play strategy, Q. What is the rationale...

Q. What is the rationale of the double-play strategy? The hedge funds deploy a double-play strategy in order to engineer steep increases in interest rates and steep declines in

Define intermediation, Define intermediation . The monetary system mak...

Define intermediation . The monetary system makes it possible for deficit and surplus economic units to come together exchanging funds for securities to their mutual benefit.

Why the term objective is used for, Why the term objective is used for ...

Why the term objective is used for The term is used in a rather narrow sense of what a firm must attempt to achieve with its financing, investment and dividend policy decisions

Mergers and acquisitions, Mergers and Acquisitions It is a Process of b...

Mergers and Acquisitions It is a Process of business combination. There are 3 forms of business combination: 1. M1.    M1 has the highest liquidity. This is the narrowest t

What do you mean by working capital, Q. What do you mean by Working Capital...

Q. What do you mean by Working Capital? Meaning of Working Capital:- Working capital management is a significant aspect of financial management. In business money is necessar

Design a digital option as a sequence of calls, An individual agent thinks ...

An individual agent thinks that there is a high probability that the Dow Jones will have a payoff (or points) between a=10000 and b=12000 at t=1. Design a digital option (see Fi

Obtain the break even rate, Question 1 (a) These are merely the diffe...

Question 1 (a) These are merely the differences of the two prices. Consequently the mark to market losses are given by { Q 1 - Q 0 ,Q 2 - Q 0 ,Q 3 - Q 0

Explain the importance of supplier appraisal, QUESTION (a) List the fiv...

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

Implications of gordon’s fundamental valuation, Q. Implications of Gordons ...

Q. Implications of Gordons fundamental valuation? Explanation: - The implications of Gordon's fundamental valuation may be as below: (1) While the rate of return of the firm

Explain about the international finance, Explain about the International Fi...

Explain about the International Finance When money crosses international boundaries businesses,individualsand governments should deal with special kinds of problems. Every c

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd