Explain in detail what beta is, and why it is relevant in the structure of a portfolio.?
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Explain in detail what beta is, and why it is relevant in the structure of a portfolio.
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Answer:
All i know about beta is its equal to the correlation of stock a times standard deviation of stock A divided by the market's standard deviation The market beta is 1.0. If your portfolio beta is 2.0. It means if the market is down 20%.. your portfolio is likely to fall double. 40%. It simply magnifies rates of return of the market.
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