· · Identify concerns about beta.

·

· Identify concerns about beta.

Expert Solution

Identify concerns about Beta

By the phrase concerns about beta, it implies that question is to find out the disadvantages or the problems of using Beta. Even though beta is a useful measure, it has its own shortcomings. The disadvantage of Beta is as follows:

Beta depends on past information or historical data. Hence, predicting future price movements are not always reliable.
Beta is useful to those investors who wish to engage in a buy or sell for short-term. But, Beta is not useful for long term investors as they have to take into account factors like market risk etc. to determine the future growth potential of the stock
Beta assumes risk by taking into account market risk and does not take into consideration the business fundamentals or economic developments.
It doesn’t tell about the time period to be measured for calculation
It doesn’t tell us about the return interval to be used for estimating beta

jeff jeffy answered 2 years ago

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