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Betas Do Not Vary Over Time and Are Quite Insensitive

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Betas do not vary over time and are quite insensitive to the time period and methodology employed in their estimation.

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Definitions:

Treasury Bill Rate

The interest rate paid by the government on its short-term debt obligations, often seen as a benchmark for risk-free rates.

Market Rate of Return

The average return on investment that is typically expected from an asset class over a period.

Expected Return

The mean of all potential investment returns, adjusted for the probability of each result occurring.

Security's Beta

A measure of an investment's volatility compared to the market as a whole, indicating its risk in relation to the market.

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