Question

Beta is a measure of systematic risk. This subject is covered in your text and there is a reference to a convenient place to find betas for individual companies. That place is MSN Money Central ( moneycentral.msn.com/home.asp). Select a large corporation and report on the price and estimate of the beta. Also, indicate how you would interpret the beta for the company you select. Do not repeat a company that another member of the class has selected. Your response (200 words or less) should be posted on or before March 10, 2019.

Answer 1

Beta is a measure of the systematic risk of the company. It indicates how much more or less volatile the returns of the company's stock would be with regards to the broader market. A beta of more than 1 would indicate that the stock is more riskier than the market and less than 1 would indicate that the stock is less prone to volatility.

If we see the stock of Walmart, Its price is 98.26 and the beta is 0.36. This suggest that the stock is exteremely less volatile and less susceptible to spikes or falls as compared to the market. This may be due to kind of business that the company is in and due to the large size and stable kind of business, the company stock is expected to also provide stable returns and be less volatile. So the beta of the stock is very less and the stock return as per capital asset pricing model would be similar to that of risk free rate.