In an individual stock, relevant risk is classified as___________?
Correct answer: B. Beta coefficient
- A. Alpha coefficient
- B. Beta coefficient
- C. Stand-alone coefficient
- D. Relevant coefficient
Explanation
Beta measures a stock's sensitivity to market movements and therefore captures its systematic, or relevant, risk. Alpha measures abnormal performance rather than the stock's market risk.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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