Notes Flashcards
1
Q
What is Beta?
A
It’s the measure of a company’s stock volatility in relation to the overall stock market.
2
Q
What does beta of -1, 0, 1, and 2 mean? Give examples.
A
Negative beta means the companies stock moves opposite of the overall stock market.
Beta of 0 means there’s no correlation.
Beta 1 means it’s perfectly correlated with the stock market. Moves exactly with the market.
Beta of 2 means the stock moves are amplified with what the market moves. So greater in high market and worse in low markets. Moves 2x the market.
Negative beta: gold companies
Zero beta: utilities
One beta:
2 beta:
