Question: Look at the picture comparing the returns for Tesla (TSLA) and S&P 500 (^GSPC). It's obvious that the return volatility (i.e. standard deviation) of Tesla

  1. Look at the picture comparing the returns for Tesla (TSLA) and S&P 500 (^GSPC). It's obvious that the return volatility (i.e. standard deviation) of Tesla stock is at least 3-4 times greater than that of S&P 500. Yet, if you look up Tesla's beta (on the summary page of Yahoo Finance) is much less than one (1.0) suggesting that TSLA is LESS volatile than the market.
  2. How do you explain this discrepancy between what standard deviation tells you (that TSLA is extremely risky) and what beta tells you (that the stock is LESS risky than the market (SP500)?
  3. Respond to a minimum of two of your peers.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

Look at the picture comparing the returns for Tesla (TSLA) and S&P 500 (^GSPC). It's obvious that the return volatility (i.e. standard deviation) of Tesla stock is at least 10 times greater (that's...

Q:

Betas Look at the picture comparing the 5-year returns for Tesla (TSLA) and S&P 500 (^GSPC). It's obvious that the return volatility (i.e. standard deviation) of Tesla stock is at least 3-5 times...

Q:

Betas Look at the picture comparing the 5-year returns for Tesla (TSLA) and S&P 500 (^GSPC). It's obvious that the return volatility (i.e. standard deviation) of Tesla stock is at least 3-5 times...

Q:

1. Look at the picture comparing the 5 year returns for Tesla (TSLA) and S&P 500 (GSPC). It's obvious that the return volatility (i.e. standard deviation of returns) of Tesla stock is at least 5-10...

Q:

Look at the picture comparing the 5 year returns for Tesla (TSLA) and S&P 500 (^GSPC). It's obvious that the return volatility (i.e. standard deviation of returns) of Tesla stock is at least 5-10...

Q:

Look at the picture comparing the 5 year returns for Tesla (TSLA) and S&P 500 (^GSPC). It's obvious that the return volatility (i.e. standard deviation of returns) of Tesla stock is at least 5-10...

Q:

Look at the picture comparing the 5 year returns for Tesla (TSLA) and S&P 500 (^GSPC). It's obvious that the return volatility (i.e. standard deviation) of Tesla stock is at least 3-5 times greater...

Q:

Betas Chapters but the t h em e of the difference between the bea and the vandard des mesures of View Full Description and Attachments 1. Look at the picture comparing the year Tesla n d SAP ISP It's...

Q:

Questions for CAPM Analysis of your company. Use the excel template and guidelines attached, or use the Bloomberg BETA function, to answer the following questions. Please answer at least five of the...

Q:

"DISCUSS THE EFFECTS OF COVID 19 ON LABOR MARKETS AND THE ECONOMY" Provide an introduction and the background of your study, and clearly state what your research question or objective is. What real...

Q:

Explain briefly what is meant by 'An Accounting System.

Q:

In Figure a, a particle of charge le is initially at coordinate z = 20 nm on the dipole axis through an electric dipole, on the positive side of the dipole. (The origin of z is at the dipole center.)...

Q:

Time Value of Money is not relevant for loan and mortgage decisions. False Question 5 options: TrueFalse

Q:

Draw a class diagram and its relationship based on the following statements. You can use any UML tool/software to represent your class diagram. Do NOT copy and paste your diagram, use the attachment...