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What does beta measure? How do you calculate beta? Search for a company on the Web...

What does beta measure? How do you calculate beta? Search for a company on the Web that your interested  in and find what there beta is.   Let the class know what company and what there beta means?

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Beta is a measure of the systematic risk of a stock with respect to the market. It is that risk which cannot be diversfied. According to the Capital Asset Pricing Model, by investing in market portfolio the unsystematic risk can be diversified. Beta shows how much the stock price will move if market moves by one percent.

Beta is calculated as ratio of covariance of a stock with respect to market to market variance. To calculate the same, we need only the returns of a particular stock and the market returns for the same period of time.

The company that has been chosen by me is one of the most prominent automobile manufacturers, the Ford Motor Company. According to Yahoo Finance, beta is 0.84, which means that for every 1% change in market, price of Ford will change by 0.84%..

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