Purchase Solution

Beta

Not what you're looking for?

Ask Custom Question

Explain how to estimate the beta of a stock. Explain the logic regarding how beta serves as a measure of a stock's risk.

Please explain this a simply as possible so that I may understand.

Purchase this Solution
Solution Summary

The expert explains how to estimate the beta of a stock.The logic regarding how beta serves as a measure of a stock's risk is determined.

Solution Preview

Beta coefficient, or beta for short, is the amount of systematic risk present in a particular risky asset relative to that in an average risky asset. In other words, beta coefficient is used to measure the level of systematic risk for different investments. Systematic risks are ...

Purchase this Solution
Free BrainMass Quizzes
Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

Basics of corporate finance

These questions will test you on your knowledge of finance.

Introduction to Finance

This quiz test introductory finance topics.

Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

View More Free Quizzes
Related BrainMass Solutions

  • Galois's Construction of his Fields

    Solving (1+ beta)x + beta = 1 + beta^2, we get (1+beta)x=1+beta+beta^2 beta^2(1+beta)x=beta^2+beta^3+beta^4 x=beta^2+beta^3+beta^4 Now beta^3=1+beta^2, so x=beta^2+beta^3+beta(1+

  • Setting up Trigonometric Problem Using Radius of a Circle

    ] =>[1.9375-0.5*cos(beta/2)]*cos(beta/2)=[1.875+0.5*sin(beta/2)]*sin(beta/2) =>1.9375*cos(beta/2)-1.875*sin(beta/2)=0.5*[cos^2(beta/2)+sin^(beta/2)] =>1.9375*cos(beta/2)-1.875*sin(beta/2)=0.5 => 19.375*cos(beta/2)-18.75*sin(beta/2)=5

  • C++ Programming (Arrays and Strings)

    for (i = 0; i < 3; i++) for (j = 0; j < 3; j++) beta[i][j] = i + j; Ans: beta[0][0] = 0+0 = 0 beta[0][1] = 0+1 = 1 beta[0][2] = 0+2 = 2 beta[1][0] = 1+0 = 1 beta[1][1] = 1+1 = 2 beta[1][2] = 1+2 = 3 beta[2][0] = 2+0 = 2 beta[2][1] = 2+1 =

  • C++ Programming Control Structures

    cin >> beta; switch (beta) { case 3: beta = beta + 3; case 1: beta++; break; case 5: beta = beta + 5; case 4: beta = beta + 4; } The value of beta at the end of the program is 7. suppose the input is 3 i.e., beta = 3.

  • Corporate Risk: How would you describe beta? When would you use beta?

    231439 Corporate Risk: Description of Beta How would you describe beta? How does beta assist in identifying the different levels of risk? When would you use beta?

  • What does the beta of the replacement stock have to be to produce a new portfolio of 1.55?

    Beta of portfolio = 0.1*beta of stock 1 + 0.1*beta of stock 2 + ........+ 0.1*beta of stock 10 Let us say that stock 1 is stock A 1.64 = 0.1*2 + 0.1*beta of stock 2+ .......+0.1*beta of stock 10 Eq(1) After solving equation 1 we get 0.1

  • Magnetization of europium.

    B: = 1/beta d Log[Z]/dB (4) Let's see if this works: 1/beta d Log[Z]/d B = 1/beta 1/Z dZ/dB Insert in here Z = sum over r of exp(-beta E_r): 1/beta d Log[Z]/d B = 1/beta 1/Z sum over r of exp(-beta E_r) (-beta) dE_r/dB

  • Working with Portfolio Betas

    If we knew the beta of each stock, the portfolio beta is: Portfolio beta = 0.05 X beta1 + 0.05 * beta 2 +.....+ 0.05 * beta 20 Thus each stock contributes to the portfolio beta as 0.05 * stock beta The stock with a beta of 1 contributes to the

  • Portofolio's new beta

    Therefore we have following equation Portfolio beta = weight of stock 1*beta of stock 1 + weight of stock 2*beta of stock 2 + ................. + weight of stock n*beta of stock n In this example Portfolio beta = weight of stock 1*beta of stock

  • Weighted Average Beta

    Weighted average Beta beta p=summation of wi* beta i= w1* beta 1 + w2*beta 2+ w3beta 3 + w4beta 4+--- Division Weight (wi) Beta beta i wi beta i Explanation Electric 60.00% 0.85 0.5100 =60.%*0.85 Bus transportation

View More Related Solutions