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Stock Beta

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Is the beta of a stock static or dynamic? What could affect the beta of a stock?

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Solution Summary

The solution explains whether a stock's beta is static or dynamic and what factors can affect it.

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As you will likely recall, the beta of a stock is the measure of the stock's volatility against the market as a whole. The overall market is said to have a beta of 1.0. So, if a stock's share price swings more wildly (up, down, or both) than the overall market, the stock's beta will be greater than 1.0 indicative of a relatively higher-risk investment opportunity.

Conversely, if a stock's share ...

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