n NISM Certifications
XV NISM Series XV
Medium

What does ‘Beta’ measure in finance?

Practice question from NISM XV Mock Test 5 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Liquidity risk

  2. Sensitivity of stock returns to market returns

    Correct answer

  3. C

    Profitability of a company

  4. D

    Creditworthiness

Why this is the answer

Beta quantifies how a stock’s price moves relative to the overall market. Beta > 1 indicates higher volatility than the market, while Beta < 1 indicates lower volatility. It does not measure liquidity, profitability, or creditworthiness.

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