Difference between Systematic risk and Beta
This query is : Resolved
Santosh Mahato
(Querist)
01 October 2010
Dear Experts,
Can any one tell me the difference between systematic risk and Beta security?
If beta is also systematic risk then why not we calculate beta when question ask for calculation of systematic risk?
Can any one tell me the difference between systematic risk and Beta security?
If beta is also systematic risk then why not we calculate beta when question ask for calculation of systematic risk?
CA Suraj Lakhotia
(Expert)
01 October 2010
Beta is a measure of Systematic risk. It helps us understand how risky is a particular security.
The following write up may be useful
https://en.wikipedia.org/wiki/Modern_portfolio_theory
The following write up may be useful
https://en.wikipedia.org/wiki/Modern_portfolio_theory
Santosh Mahato
(Querist)
01 October 2010
Theoritically i know it but try to reply my second question it is based on CA final practial question.
CA Suraj Lakhotia
(Expert)
02 October 2010
Beta itself is not systematic risk. It measures the sensitivity of a stock with reference to market. With the help of beta you can find the systematic risk. Risk is represented in the some units whereas beta is absolute.
08 October 2010
Hi Santosh,
To the best of my knowledge, both Beta and systematic risk are same.
Can you type the whole question, so that I can help assist.
To the best of my knowledge, both Beta and systematic risk are same.
Can you type the whole question, so that I can help assist.
08 October 2010
Suraj, Beta measures the systematic risk (risk of the security in relation to the market)
CA Suraj Lakhotia
(Expert)
08 October 2010
The measure (beta) cannot be the risk itself.
08 October 2010
Agreed that beta measures only the systematic risk. The risk of the asset in relation to the whole market.
Standard deviation can be used as a stand alone risk measure of the asset.
Standard deviation can be used as a stand alone risk measure of the asset.
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