Beta

The measure of an asset's risk in relation to the market (for example, the S&P500) or to an alternative benchmark or factors. Roughly speaking, a security with a beta of 1.5, will have move, on average, 1.5 times the market return. [More precisely, that stock's excess return (over and above a short-term money market rate) is expected to move 1.5 times the market excess return).] According to asset pricing theory, beta represents the type of risk, systematic risk, that cannot be diversified away. When using beta, there are a number of issues that you need to be aware of: (1) betas may change through time; (2) betas may be different depending on the direction of the market (i.e. betas may be greater for down moves in the market rather than up moves); (3) the estimated beta will be biased if the security does not frequently trade; (4) the beta is not necessarily a complete measure of risk (you may need multiple betas). Also, note that the beta is a measure of co-movement, not volatility. It is possible for a security to have a zero beta and higher volatility than the market.

Beta

A measure of a security's or portfolio's volatility. A beta of 1 means that the security or portfolio is neither more nor less volatile or risky than the wider market. A beta of more than 1 indicates greater volatility and a beta of less than 1 indicates less. Beta is an important component of the Capital Asset Pricing Model, which attempts to use volatility and risk to estimate expected returns.

beta

A mathematical measure of the sensitivity of rates of return on a portfolio or a given stock compared with rates of return on the market as a whole. A high beta (greater than 1.0) indicates moderate or high price volatility. A beta of 1.5 forecasts a 1.5% change in the return on an asset for every 1% change in the return on the market. High-beta stocks are best to own in a strong bull market but are worst to own in a bear market. See also alpha, capital-asset pricing model, characteristic line, portfolio beta.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Beta.

Beta is a measure of an investment's relative volatility. The higher the beta, the more sharply the value of the investment can be expected to fluctuate in relation to a market index.

For example, Standard & Poor's 500 Index (S&P 500) has a beta coefficient (or base) of 1. That means if the S&P 500 moves 2% in either direction, a stock with a beta of 1 would also move 2%.

Under the same market conditions, however, a stock with a beta of 1.5 would move 3% (2% increase x 1.5 beta = 0.03, or 3%). But a stock with a beta lower than 1 would be expected to be more stable in price and move less. Betas as low as 0.5 and as high as 4 are fairly common, depending on the sector and size of the company.

However, in recent years, there has been a lively debate about the validity of assigning and using a beta value as an accurate predictor of stock performance.

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References in periodicals archive

One is to add lactase to the milk, which pre-digests the sugar into glucose and galactose.

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Previous studies have shown that 40% babies presented with infant colic suffered from lactase enzyme deficiency,6,7 an intestinal enzyme that breaks down the lactose into simple sugar (galactose and glucose) in small intestine.8

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Effect of a single dose of lactase on symptoms and expired hydrogen after lactose challenge in lactose-intolerant subjects.

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European lactase persistence genotype shows evidence of association with increase in body mass index.

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Predictive values of lactase activity are lower, probably due to the presence of primary lactase deficiency in coeliac patients.

Diagnostic and Research Aspects of Small Intestinal Disaccharidases in Coeliac Disease

A lactase deficiency does not allow lactose to be broken into absorbable nutrients within the intestinal tract.

Digestive enzyme replacement therapy: pancreatic enzymes and lactase

Lactase deficiency is largely inherited (congenital and familial deficiency), though a condition known as secondary lactase deficiency can result from inadequate lactase production and can be caused by a problem with the small intestine, such as surgery, or another condition, such as Crohn's disease, ulcerative colitis, chemotherapy, celiac disease, or gastroenteritis.

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Lactose intolerance, in which the body does not produce enough lactase (the enzyme that breaks down lactose--milk sugar), may benefit from lactase supplementation.

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INTRODUCTION: Adult type hypolactasia develops due to decreased activity of the enzyme lactase phlorizin hydrolase and stops its synthesis in mammals after the weaning period.

A single nucleotide polymorphism C/T-13910 and consumption of dairy products in Uzbek population

Lactose intolerance, caused by your small intestine being unable to break down lactase, an enzyme found in dairy foods.

Why do I feel so bloated?

Standard cow's milk contains a fair amount of lactose, a sugar that gives milk its sweetness and that must be broken down by lactase, a digestive enzyme produced in the small intestine of most mammals.

Should they regularly feed their adult cat cow's milk?