The sensitivity of a stock's return to the return on the market portfolio is called the stock's
.

Question

The sensitivity of a stock's return to the return on the market portfolio is called the stock's 
.

BlackTom AI · Accepted Answer

The question asks for the term that describes how much a stock's return moves in response to moves in the market portfolio. This sensitivity is known as the stock's beta.

Beta is a measure of systematic risk and is defined as the covariance between the stock's return and the market return divided by the variance of the market return. In practical terms, it represents the slope of the stock's returns regressed on the market's returns: a beta greater than 1 implies the stock tends to move more than the market, while a beta less than 1 implies smaller moves.

The provided answer option (空白1) corresponds to the blank to be filled with 'beta'. Therefore, it correctly identifies the concept as beta.

If we consider alternative concepts, we could think about concepts like alpha (excess return not explained by market move), or diversifiable risk (idiosyncratic risk), or R-squared (the proportion of variation explained by the regression). However, none of these describe the sensitivity to market movements in the same way beta does.

In summary, the correct notion for the question is beta, since it captures how strongly a stock's returns respond to market portfolio returns.

The sensitivity of a stock's return to the return on the market portfolio is called the stock's .

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