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John Moffat.
John Moffat.-
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rishabbohra98
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If I have 100 shares in “A” company with 1.5 being the Beta, then does that mean shares in A company are 1.5 times more risky that stock exchange as a whole?
I watched the lectures in which u said it that it means it is 1.5 times as risky as the market. I didn’t clearly understand what u meant by that. How can it be “AS RISKY AS MARKET” ? It should either be more risky or less risky right?
Please can you clarify?
John Moffat
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Some shares are more risky than others. The market risk is the average risk of all the shares.
Some shares are more risky than the market (and therefore have a beta of more than 1); some shares are less risky that the market (and therefore have a beta of less than 1).
It is perfectly possible to have the same risk as the market and the beta would therefore be equal to 1.
If you are still unsure then I suggest that you also watch the free Paper FM lecture on CAPM, because most of CAPM for AFM is revision from Paper FM.
rishabbohra98
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