Stock beta measures:
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A. B. C. D.A
Stock beta measures the sensitivity of a particular stock's price movement with respect to the overall market movement. Beta is a measure of systematic risk, which is the risk that cannot be diversified away by holding a diversified portfolio. The beta of the market is always 1, and a stock with a beta of 1 moves in line with the market. A stock with a beta greater than 1 is more volatile than the market, while a stock with a beta less than 1 is less volatile than the market.
Therefore, answer A, "Stock volatility," is the correct answer. Beta is used to calculate the cost of equity capital, which is the return required by investors for taking on the risk of investing in a particular stock. Beta is also used to assess the risk of a stock or a portfolio of stocks.
Answer B, "Company earnings," is incorrect because beta is not directly related to a company's earnings. A company's earnings may affect its stock price, but this relationship is not captured by beta.
Answer C, "Stock correlation with the CPI," is incorrect because beta measures a stock's correlation with the overall market, not with the CPI. The CPI measures the change in prices of a basket of goods and services, and is used to track inflation.
Answer D, "Company debt," is incorrect because beta does not measure a company's debt. A company's debt may affect its stock price, but this relationship is not captured by beta.