In the context of finance, the term 'beta' refers to
(a) the process of simultaneous buying and selling of an asset from different platforms.
(b) an investment strategy of a portfolio manager to balance risk versus reward.
(c) a type of systematic risk that arises where perfect hedging is not possible
(d) a numeric value that measures the fluctuations of a stock to changes in the overall stock market.
Answer: option(d)
Explanation
- The process of simultaneous buying and selling of an asset from different platforms is called as 'Arbitrage' Hence option (a) is incorrect.
- An investment strategy of a portfolio manager to balance risk versus reward is called as 'Asset Allocation' Hence option (b) is incorrect.
- A type of systematic risk that arises where perfect hedging is not possible is called as 'Basis Risk'. Hence option (c) is incorrect.
- A numeric value that measures the fluctuations of a stock to changes in the overall stock market is called as 'beta' Hence option (d) is correct
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