UPSC Previous Year Question | Prelims GS | 2023

In the context of finance, the term 'beta' refers to

  1. the process of simultaneous buying and selling of an asset from different platforms
  2. an investment strategy of a portfolio manager to balance risk versus reward
  3. a type of systemic risk that arises where perfect hedging is not possible
  4. a numeric value that measures the fluctuations of a stock to changes in the overall stock market

Answer

Correct Answer

a numeric value that measures the fluctuations of a stock to changes in the overall stock market

Explanation

In finance, 'beta' is a measure of a stock's volatility/sensitivity relative to movements in the overall market.

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