What is a common measure of a stock's volatility compared to the market?

The correct answer, Beta, is a key financial metric used to assess a stock's volatility in relation to the overall market. It measures the tendency of a stock's returns to respond to market fluctuations. A beta value of 1 indicates that the stock's price tends to move with the market, meaning if the market goes up by 1%, the stock will also likely go up by 1%. A beta greater than 1 signifies that the stock is more volatile than the market, meaning it experiences larger price swings, while a beta less than 1 indicates that the stock is less volatile.

Understanding beta is crucial for investors as it helps them gauge the risk associated with a particular stock and how it fits into their overall investment strategy. A higher beta might be preferable for aggressive investors seeking growth opportunities, while a lower beta may appeal to conservative investors looking to minimize risk.

The other options—yield, dividend, and alpha—serve different purposes in financial analysis. Yield refers to the income generated from an investment, usually expressed as a percentage of the investment's cost. Dividend pertains to the distribution of a portion of a company's earnings to its shareholders, typically on a regular basis. Alpha measures the excess return of a stock relative to the return expected based on