Question

What is beta?

What is published Beta?

How are they different and why?

Answer 1

Beta is a measure of volatility of an asset in respect to the overall market index and it is often used with equities in order to find out how volatile the stock is in respect to the index and the volatility of the stock will be determining the risk associated with it because when we are looking at the Capital Asset pricing model we will be considering the beta through systematic risk, and when there will be a higher beta associated with this stock, we will be demanding a higher rate of return.

Published beta is a beta which has been published on various websites and this beta will be reflecting the historical beta of a company and it will be adjusted with various time periods.

Beta is not reflective of the historical measure and it will be reflecting the current volatility of the share in respect to the market whereas published beta is reflecting the the beta of the securities after being adjusted with various time periods. Normal beta is just reflecting the current period beta whereas published beta will be reflecting historical beta.

Published beta is generally considered for calculation of expected rate of return and normal beta will not be considered.