The Importance of Beta
Not what you're looking for?
I am trying to find out the importance of Beta. I also need to know what kind of investor would invest in high beta and low beta stocks.
Purchase this Solution
Solution Summary
This solution explains the meaning of the beta coefficient of stocks and discusses the meaning of beta for the investor, as it relates to the volatility of stocks. The solution also includes the beta of a few commonly known companies and the information on how to find the beta for publicly traded stocks.
Solution Preview
Dear Student:
The beta coefficient has a very important role in portfolio management.
By definition, beta is the amount of systematic risk present in a particular asset relative to that in an average risky asset. The average risky asset refers to the market beta, and market beta always equals one (bM = 1). A stock with a lower risk has a beta below 1, and a stock with a higher risk has a beta of over 1.
Betas for a few companies, as of today (1/29/2013) at www.finance.yahoo.com
Johnson & Johnson (JNJ) 0.44 (ticker in parenthesis)
Amazon (AMZN) 0.91
Microsoft (MSFT) 1.17
Google (GOOG) ...
Purchase this Solution
Free BrainMass Quizzes
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.
Cost Concepts: Analyzing Costs in Managerial Accounting
This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.
Business Processes
This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.
Accounting: Statement of Cash flows
This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.
Academic Reading and Writing: Critical Thinking
Importance of Critical Thinking