10:11 7 B beta is a coefficient for risk. the market(normally represented by the S&P 500 or the Dow Jones Industrial Average) has a value of 1.00. Investment with a beta of less than 1.0 are less risky. Investments with a beta great that 1.0 are riskier than the market. An investment with a beta of 2.0 is twice as risky as the market. An investment with a beta of 3.0 is three times as risky as the market. An investment of .5 is half as risky as the market. BAR, beta adjusted return, is a formula designed to compare investments of risks or investment class/categories. "Apples to apples and not apples to oranges". BETA will be given in this course The risk profile of investing in real estate, gold, stocks, a small business, or bonds are all very different. investment return--% return or profit/ cost or investment BAR- Investment return /beta ALPHABAR-market beta Home work calculate the investment return, BAR, and ALPHA of the following 5 investments. all over one year. Market return .12 or 12% 1 Gold, cost $145eseis ois50, beta .80