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Home› UPSC CSE› Prelims GS Paper I› 2023 questions› Question 17

UPSC CSE Prelims

Subject: Economy Chapter: Capital Market

2023 PYQ

Question 17

In the context of finance, the term 'beta' refers to

Choose one answer Athe process of simultaneous buying and selling of an asset from different platforms Ban investment strategy of a portfolio manager to balance risk versus reward Ca type of systemic risk that arises where perfect hedging is not possible Da numeric value that measures the fluctuations of a stock to changes in the overall stock market

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Correct answer: D

Correct Option: D (a numeric value that measures the fluctuations of a stock to changes in the overall stock market) Explanation: Beta measures an asset’s sensitivity to overall market movements; a beta above 1 indicates above-market systematic volatility. Option-wise Analysis: A. Incorrect-Simultaneous cross-market buying/selling describes arbitrage, not beta. B. Incorrect-Balancing portfolio risk and return describes portfolio management, not the beta statistic. C. Incorrect-Imperfect hedging refers to basis or residual risk, not what beta means. D. Correct-beta quantifies a stock’s co-movement relative to a market index.

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