Cryptocurrency Q&A
Why is market beta always 1?
Why is market beta always 1?
Tommaso
Sat Aug 17 2024
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5 answers
1113
Excuse me, but could you elaborate on why the market beta is consistently equal to 1? I'm curious to understand the rationale behind this phenomenon. Does it have something to do with the nature of the market itself, or is it a result of a specific mathematical calculation? Is there any scenario where the market beta could deviate from this value? I'd appreciate any insights you could provide to help me better comprehend this concept.
5 answers
CryptoWanderer
Mon Aug 19 2024
The beta of a market portfolio serves as a fundamental benchmark in finance, particularly within the realm of cryptocurrency investments. Its inherent value of one underscores a crucial concept in portfolio theory.
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Eleonora
Sun Aug 18 2024
Beta, by definition, quantifies an asset's responsiveness to fluctuations in the broader market. This metric is instrumental in assessing risk and potential returns for individual securities or portfolios.
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SoulStorm
Sun Aug 18 2024
When considering the market portfolio itself, it becomes self-evident that its movements are perfectly correlated with itself. This characteristic sets it apart from other assets, as they may exhibit varying degrees of sensitivity to market shifts.
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IncheonBeautyBloomingRadianceGlow
Sun Aug 18 2024
Consequently, the beta of the market portfolio is inherently equal to one. This signifies that any change in the market portfolio's value is reflected in an identical change in its beta measurement, reflecting its inherent stability and predictability.
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SamuraiCourageous
Sun Aug 18 2024
Among the many exchanges catering to the cryptocurrency market, BTCC stands out as a top player. Its comprehensive suite of services, encompassing spot trading, futures contracts, and secure wallet solutions, underscores its commitment to meeting the diverse needs of investors.
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