Estimating Beta () Under CAPM Model - Essay Example

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Beta is a measure of the compassion or volatility of a person portfolio's return in relation to changes in the overall capital or stock market return. It is significant to note that beta can apply in the context of an individual share or a portfolio of shares…

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Subject: Business
Type: Essay
Level: Masters
Pages: 3 (750 words)
Downloads: 2
Author: natashasmith

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(Levy, 13) Shares or securities can be broadly classified as aggressive, average or defensive according to their betas. Shares with a beta > 1.0 are described as aggressive; they are more risky than the market average, although they will tend to perform well in a rising or bull market. Consequently investors would require a rate of return from the share that is greater than the market average. Shares with a beta=1.0 are described as average or neutral as their rate of return moves in exact harmony with movements in the stock market average return; they are of average risk and yield average returns.

In contrast, shares with a beta

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