The correct answer is: B. relative to market
Beta is a measure of a stock’s volatility relative to the market. A beta of 1 means that the stock’s price moves in the same direction as the market. A beta of less than 1 means that the stock is less volatile than the market, and a beta of greater than 1 means that the stock is more volatile than the market.
For example, if a stock has a beta of 1.5, it means that the stock is 50% more volatile than the market. This means that if the market goes up by 10%, the stock is expected to go up by 15%. Conversely, if the market goes down by 10%, the stock is expected to go down by 15%.
Beta is a useful tool for investors to use when trying to understand the risk of a stock. A stock with a high beta is considered to be a riskier investment than a stock with a low beta. Investors who are looking for more conservative investments should avoid stocks with high betas.
Here is a brief explanation of each option:
- A. coefficient of market
This is not a correct answer because beta is not a coefficient of the market. Beta is a measure of a stock’s volatility relative to the market.
- B. relative to market
This is the correct answer because beta measures a stock’s volatility relative to the market.
- C. irrelative to market
This is not a correct answer because beta is a measure of a stock’s volatility relative to the market.
- D. same with market
This is not a correct answer because beta measures a stock’s volatility relative to the market. A stock with a beta of 1 moves in the same direction as the market, but a stock with a beta of 2 moves twice as much as the market.