Discuss what beta measures and explain how it is used in risk analysis. The expected rates of return and the beta coefficients of the alternatives are as follows.

What is a beta coefficient, and how are betas used in risk analysis? Do the expected returns appear to be related to each alternative s market risk? Is it possible to choose among the alternatives on the basis of the information developed thus far?

Security Return () Risk (B) High Tech Market U.S. Rubber T-bills Collections 17.4% 15.0 13.8 8.0 1.7 1.29 1.00 0.68 0.00 -0.86