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    Sneha Ans 31

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    sanskriti
    Beta is used to measure the risk of a single asset compared to the overall market. A beta of 1 means the asset moves with the market, while a beta greater than 1 suggests it is more volatile. When an asset is part of a larger, more diversified portfolio its risk is reduced as different assets perform independently, lowering the overall portfolio beta and risk compared to holding single assets individually.

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    Sneha Ans 31

    Uploaded by

    sanskriti
    25 views1 page
    Beta is used to measure the risk of a single asset compared to the overall market. A beta of 1 means the asset moves with the market, while a beta greater than 1 suggests it is more volatile. When an asset is part of a larger, more diversified portfolio its risk is reduced as different assets perform independently, lowering the overall portfolio beta and risk compared to holding single assets individually.

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    Beta is used to measure the risk of a single asset compared to the overall market. A beta of 1 means the asset moves with the market, while a beta greater than 1 suggests it is more volatile. When an asset is part of a larger, more diversified portfolio its risk is reduced as different assets perform independently, lowering the overall portfolio beta and risk compared to holding single assets individually.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    25 views1 page

    Sneha Ans 31

    Uploaded by

    sanskriti
    Beta is used to measure the risk of a single asset compared to the overall market. A beta of 1 means the asset moves with the market, while a beta greater than 1 suggests it is more volatile. When an asset is part of a larger, more diversified portfolio its risk is reduced as different assets perform independently, lowering the overall portfolio beta and risk compared to holding single assets individually.

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    How will you measure the risk of an asset if it is held as a

    single security and how this measure will change if the same
    assets is held as a part of a bigger portfolio?

    Common risk measure is beta. The level of systematic risk that an Single security
    or an industrial sector has in comparison to the entire stock market is measured
    by beta. The market's beta is one, and it can be used to assess a security's risk.
    When the beta of a security is equal to 1, the price of the security moves in
    lockstep with the market. A beta greater than one suggests that an investment is
    more volatile than the market.
    In contrast, if a security's beta is smaller than one, it means it is less volatile than
    the market. Let's say the beta of a security is 1.5. The security is 50 percent more
    volatile than the market in principle.

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