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Stock performance measures typically include metrics like total return, which accounts for both price appreciation and dividends received; price-to-earnings (P/E) ratio, which evaluates a company's valuation relative to its earnings; and volatility, often measured by beta, indicating how much a stock's price fluctuates compared to the market. Other important measures are earnings per share (EPS), which reflects a company's profitability, and return on equity (ROE), which assesses how effectively management is using equity to generate profits. These metrics help investors gauge a stock's historical performance and potential future performance.

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4mo ago

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Can you describe two measures of stock market performance?

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Explain various performance measures of disks.


Why is beta the correct measure of a stock riskiness?

Beta measures a stock's volatility (the swings up and down in price). The market as a whole has a beta of 1.0, but each stock is determined a beta value from a history of it's stock movements. Riskiness equates to the stock losing value and high beta stocks are more prone to falling faster.


What is a sort of average that takes into account the price of many stocks that are traded on the exchange?

A sort of average that takes into account the price of many stocks traded on an exchange is known as a stock market index. Examples include the S&P 500, which measures the performance of 500 large companies listed on stock exchanges in the United States, and the Dow Jones Industrial Average, which tracks 30 significant publicly traded companies. These indices provide a snapshot of market trends and overall economic health by reflecting the collective performance of the selected stocks.


How are stocks measured?

Stocks are measured primarily through their price, which reflects the current market value of a company's shares. Key metrics include market capitalization, calculated by multiplying the stock price by the total number of outstanding shares, and earnings per share (EPS), which indicates a company's profitability. Other important measures include the price-to-earnings (P/E) ratio, which assesses a stock's valuation relative to its earnings, and dividend yield, which shows the return on investment from dividends relative to the stock price. Together, these metrics help investors evaluate a stock's performance and potential for future growth.