What is Beta in Finance? - Definition & Formula

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

_____ is the risk associated with a security in relation to the rest of the market.

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1. If a security's beta is 1.2, the security's beta is _____ the market.

2. Which of the following is NOT used in the capital asset pricing model calculation?

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About This Quiz & Worksheet

See what you understand about calculating beta in finance with these helpful study assessments. Key points on the quiz include the word for a security or portfolio's risk in relation to the market as a whole and how to calculate that value.

Quiz & Worksheet Goals

Quiz topics include:

  • How to calculate in the capital asset pricing model
  • The process of calculating beta
  • One disadvantage to beta

Skills Practiced

  • Information recall - access the knowledge you've gained regarding what you need in order to calculate a security's beta
  • Critical thinking - apply relevant concepts to examine information about beta in finance in a different light
  • Knowledge application - use your knowledge to answer questions about a downside of beta and what the capital asset pricing model uses

Additional Learning

For more information on the subject, review the lesson called What is Beta in Finance? - Definition & Formula. The following areas of study will be addressed:

  • What it's important to be able to assess risk
  • The way in which the capital asset pricing model is used
  • Another name for beta
  • Whether beta is strong or weak
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