A Stock's Beta Is More Relevant as a Measure of Risk

question 120

True/False

A stock's beta is more relevant as a measure of risk to an investor who holds only one stock than to an investor who holds a well-diversified portfolio.

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Definitions:

Compounded Monthly

The process of adding interest to the principal sum of a loan or deposit, or in other words, interest on interest, on a monthly basis.

Compounded Annually

Interest on an investment or loan calculated once a year on both the initial principal and the accumulated interest from previous periods.

RRSP

Registered Retirement Savings Plan, a Canadian retirement savings vehicle that offers tax benefits.

Ordinary Annuity

Definition: An annuity for which the payment or receipt of funds happens at the end of each period.