The contribution of a security to the risk of a large, well-diversified portfolio is proportional to the

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The contribution of a security to the risk of a large, well-diversified portfolio is proportional to the covariance of the security’s return with the market’s return. This contribution, when standardized, is called the beta. The beta of a security can also be interpreted as the responsiveness of a security’s return to that of the market.

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Corporate Finance

ISBN: 9780073105901

8th Edition

Authors: Jeffrey Jaffe, Bradford D Jordan

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