Concept: Beta (β_i)

CFA Level I Glossary

Beta measures an asset’s systematic risk as its sensitivity to market moves. A beta of 1.5 suggests the asset tends to move about 1.5 percent when the market moves 1 percent, on average, for excess-return co-movement. It captures non-diversifiable risk in models like the CAPM. Do not treat beta as total risk; firm-specific volatility can be large even when beta is low.

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