What Does the "Beta" of an Asset Measure

question 29

Multiple Choice

What does the "beta" of an asset measure?

• A) how the nondiversifiable risk compares with diversifiable risk for an asset
• B) how the expected return compares with the diversifiable risk of a given asset
• C) how the expected return compares with the nondiversifiable risk of the market portfolio
• D) how the nondiversifiable risk of a given asset compares with that of the market portfolio

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Definitions:

Consumer Price Index

An indicator quantifying the mean variation over periods in the financial commitments urban consumers make towards a particular set of consumer goods and services.

Basket of Goods

A fixed set of consumer products and services whose price is monitored over time to calculate inflation through the Consumer Price Index.

Inflation Rate

The rate at which prices for a wide range of goods and services go up, causing a decline in how much can be bought with the same amount of money.

Teddy Bears

Soft, plush toys in the form of bears, often given as a comfort object for children and as gifts of affection for holidays or special occasions.