Risk and return can be seen as two sides of the same coin. In other words, risk and return are inexorably intertwined. Beta is one measure of market risk. Review the particular emphasis on the "market risk" section of this chapter. For this discussion post, address the following: in your own words, what is the meaning of the terms beta and capital asset pricing model? Select three stocks from the listing of the dow jones industrial average stock betas from the textbook. List these three stocks, along with their corresponding beta. Which one of the three stocks in your list is least risky? Why? Which one of the three stocks in your list is most risky? Why? If the beta of a portfolio of stocks was calculated to be 1.0, how should your portfolio react to changes in the overall market? If you assembled a mix of stocks for a financial portfolio for your personal use, would you prefer a low beta, a beta of 1.0, or a high beta? Why?

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Beautiful Beta Beta refers to the numerical value that is used in the measurement of fluctuations of ... View the full answer