BETA
This query is : Resolved
12 October 2008
What is "beta" in CAPM of Financial Management? How shall we used in problems in exams? I want to know in detail? Pls.......
12 October 2008
BETA : RISK.
IT IS RISK FOR EXTRA RETURNS.
CAPM :l CAPITAL ASSET PRICING MODEL
IT IS RISK FOR EXTRA RETURNS.
CAPM :l CAPITAL ASSET PRICING MODEL
12 October 2008
Beta is market sensitivity of the stock as compared to that sector or the entire market.
For Example, if the beta of a particular stock is 2, it implies that if the market moves up by 1%, that stock will move up 2% and vice-versa.
CAPM=Beta x Risk Adjusted Market Return.
Risk Adjusted Market Return = Market Return - Risk free return.
For Example, if the beta of a particular stock is 2, it implies that if the market moves up by 1%, that stock will move up 2% and vice-versa.
CAPM=Beta x Risk Adjusted Market Return.
Risk Adjusted Market Return = Market Return - Risk free return.
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