Who Invented Beta? Discover William F. Sharpe's Contribution to Finance

Learn about William F. Sharpe's invention of beta and its impact on stock market volatility measurement.

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Beta was invented by William F. Sharpe in the 1960s. He developed the Capital Asset Pricing Model (CAPM) which introduced beta as a measure of a stock’s volatility in relation to the overall market.

FAQs & Answers

  1. What is beta in finance? Beta is a measure of a stock's volatility in relation to the overall market, helping investors understand risk.
  2. How does the Capital Asset Pricing Model relate to beta? The Capital Asset Pricing Model (CAPM) uses beta to determine the expected return on an investment based on its risk relative to the market.
  3. Who is William F. Sharpe? William F. Sharpe is an American economist known for his work in financial economics and the development of the Capital Asset Pricing Model.
  4. Why is beta important for investors? Beta is important for investors as it helps evaluate risk and potential return, guiding decision-making in investment portfolios.

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