Question

what rome does beta paly in absoute valuation

Answer 1

Beta refers to degree of market risk attached to a security. beta measures the degree of sensitivity of security return to market return. Beta defines the degree of security price will if there is change in market return. Risk premium on security depends on the degree of beta, a high beta value results in more return while a low beta value results in low return on security so beta play a very important role in determining the required rate of return on a security or stock.