Hope, It may help u some time..
Beta means, it measures the volatility of securities to the changes in the market.
β (level of risk) =
| r |
| r |
where
| r |
| r |
( I put
| r |
(or) Covariance(s,m) / 2m
β should always be applied on risk premium and not to the entire return.
rs = rf + (rm – rf ) * β
Where
rf = Risk free rate
rs = Expected return on securities (or)
[Capital Appreciation + Dividend of the company]
rm = Expected return on market portfolio (or)
[Market index {Market rate} appreciation + Market
dividend yield %]
CAclubindia
