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Discuss the use and limitations of Beta and how it is applied as a tool for...

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Finance

Discuss the use and limitations of Beta and how it is applied asa tool for risk measurement.

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Beta is a measure of a stocks volatility in relation to the market It is used to compute an assets expected return in the capital asset pricing model CAPM This helps the investor to decide whether he wants to go for the riskier stock that is highly correlated with the market or with a less volatile one Uses of Beta A stocks price variability is important to consider when assessing risk If you think about risk as the possibility of a stock losing its value the beta has    See Answer
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Discuss the use and limitations of Beta and how it is applied asa tool for risk measurement.

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