2023 GS Paper I, all questions
UPSC Prelims 2023 · GS Paper I
Question 73: Economy and Social Development
In the context of finance, the term 'beta' refers to
athe process of simultaneous buying and selling of an asset from different platforms
ban investment strategy of a portfolio manager to balance risk versus reward
ca type of systemic risk that arises where perfect hedging is not possible
da numeric value that measures the fluctuations of a stock to changes in the overall stock market
AnswerUPSC’s answer is (d).
In finance, beta measures how much a stock's price moves relative to the overall market. A beta of 1 means it moves with the market, above 1 means it is more volatile than the market, and below 1 means less volatile. It captures market (systematic) risk and is used in the capital asset pricing model. It is not arbitrage, a portfolio-balancing strategy, or a label for unhedgeable risk.
Why each option is right or wrong
- (a) This describes arbitrage.
- (b) This describes asset allocation or portfolio strategy.
- (c) Systemic risk is a different concept from beta.
- (d) Correct: beta measures a stock's sensitivity to market moves.
Answer: UPSC’s key. Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 2023, General Studies Paper I, Series A. The paper on upsc.gov.in.