Question

Discuss Apple's (AAPL) beta and relate to the volatility of the stock and its returns over a six month period.

Answer 1

Beta of a stock is reflecting the sensitiveness of the stock in respect to the market and it is a reflection of volatility of the stock so sometimes, it is also used to reflect the systematic risk associated with the movement of the stock in Capital Asset pricing model.

Beta of Apple company is 1.31 if we are considering the past five years of monthly beta which has been adjusted to risk and beta of Apple is representing that it is a highly sensitive company in respect to the market rate of volatility so it is more volatile than the market and it is reflecting a higher volatility so it is more sensitive stock and it is having a higher systematic risk in respect to the market.

Market rate of return of Apple in past six months had been closed to 80% which is a representation of outperformance of the Apple in respect to the market indices and this company has provided with a phenomenal rate of return as its volatility and higher risk & it is moving with a higher pace than the market and it is also representing that it is having a higher risk so it can be correlated with a higher rate of return so it can be overall summarised that the beta of Apple is relatively higher than the index and it is also having a higher rate of return than the index.