Beta (finance)/Definition: Difference between revisions
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A measure of the degree to which the rate of return of a share tracks that of the equity market as a whole (defined as the [[covariance]] between the share's rate of return and the average market rate, divided by the [[variance]] of the market rate). If beta = 1 the share's rate of return moves in line with the market rate; if it is negative, it falls when the market rate rises. | |||
Latest revision as of 06:45, 22 February 2010
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Beta (finance) [r]: A measure of the degree to which the rate of return of a share tracks that of the equity market as a whole (defined as the covariance between the share's rate of return and the average market rate, divided by the variance of the market rate). If beta = 1 the share's rate of return moves in line with the market rate; if it is negative, it falls when the market rate rises.