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What is the basis of the beta for investment decision and can you explain the usefulness and relevance of the concept of the beta in the investment?
Wiki User
∙ 12y ago
Beta describes the relationship between the volatility of a stock with respect to the market as a whole (which the market represented by a suitable index).
A beta of less than one means that the stock is less volatile than the index, and vice-versa.
Basically, if a benchmark returns 10%, and you're considering a stock with a beta of 1.5%, that means the stock needs to have a return of greater than 15% for it to be worthwhile.
The related link contains much more information
Wiki User
∙ 12y ago
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Issues in strategic decision making?
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