- Industry: Financial services
- Number of terms: 73910
- Number of blossaries: 1
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The measure of an asset's risk in relation to the market (for example, the S&P500) or to an alternative benchmark or factors. Roughly speaking, a security with a beta of 1.5, will have move, on average, 1.5 times the market return. (More precisely, that stock's excess return (over and above a short-term money market rate) is expected to move 1.5 times the market excess return).) According to asset pricing theory, beta represents the type of risk, systematic risk, that cannot be diversified away. When using beta, there are a number of issues that you need to be aware of: (1) betas may change through time; (2) betas may be different depending on the direction of the market (i.e. betas may be greater for down moves in the market rather than up moves); (3) the estimated beta will be biassed if the security does not frequently trade; (4) the beta is not necessarily a complete measure of risk (you may need multiple betas). Also, note that the beta is a measure of comovement, not volatility. It is possible for a security to have a zero beta and higher volatility than the market.
Industry:Financial services
The market beta of a security is determined as follows: Regress excess returns of stock y on excess returns of the market. The slope coefficient is beta. Define n as number of observation numbers.
Industry:Financial services
The price a potential buyer is willing to pay for a security. Sometimes also used in the context of takeovers where one corporation is bidding for (trying to buy) another corporation. In trading, we have the bid-ask spread which is the difference between what buyers are willing to pay and what sellers are asking for in terms of price.
Industry:Financial services
Refers to over-the-counter trading. Bid from another dealer exists at the same (listed) or higher (OTC) price.
Industry:Financial services
This is the quoted bid, or the highest price an investor is willing to pay to buy a security. Practically speaking, this is the available price at which an investor can sell shares of stock. Related: Ask, offer.
Industry:Financial services
The ratio of the number of bids received in a Treasury security auction compared to the number of accepted bids.
Industry:Financial services
Used in the context of general equities. Announcement that a holder of securities wants to sell and will entertain bids.
Industry:Financial services
In the context of general equities, a nonaggressive buyer who prefers to await a natural seller in the hope of paying a lower price.
Industry:Financial services
