Beta

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Beta

• The beta is a measure of a stock’s price volatility in relation to the rest of the market.

In other words, how does the stock’s price move relative to the overall market.

• Example: DNB

• .67

• Less than 1 means that the risk is lower than the market average

Beta

• Stocks that have a beta greater than 1 have greater price volatility than the overall market and are more risky.

• Stocks with a beta of 1 fluctuate in price at the same rate as the market.

• Stocks with a beta of less than 1 have less price volatility than the market and are less risky

Beta - Risk

• Risk also implies return. Stocks with a high beta should have a higher return than the market. If you are accepting more risk, you should expect more reward.

• Investors can find the best use of the beta ratio in short-term decision-making, where price volatility is important. If you are planning to buy and sell within a short period, beta is a good measure of risk.

Book Value - definition

• The value at which an asset is carried on a balance sheet. To calculate, take the cost of an asset minus the accumulated depreciation.

Example: DNB & WFM

Read more: http://www.investopedia.com/terms/b

/bookvalue.asp#ixzz1nL4tw3S1

• 1. It is the total value of the company's assets that shareholders would theoretically receive if a company were liquidated.

2. By being compared to the company's market value , the book value can indicate whether a stock is under- or overpriced.

Read more: http://www.investopedia.com/terms/b/bo okvalue.asp#ixzz1nL59N9w6

Price – Earnings Ration (P/E ratio)

• A valuation ratio of a company's current share price compared to its per-share earnings.

Calculated as:

• Market Value per Share

Earnings per Share (EPS)

• For example, if a company is currently trading at $43 a share and earnings over the last 12 months were $1.95 per share, the P/E ratio for the stock would be 22.05

($43/$1.95).

Read more: http://www.investopedia.com/terms/p/priceearningsratio.asp#ixzz1nL7DuZPX

Earnings per Share (EPS)

• portion of a company’s profit allocated to each outstanding share of common stock. For instance, a corporation that earned $10 million last year and has 10 million shares outstanding would report earnings of $1 per share.

Read more: http://www.answers.com/topic/earning

-per-share#ixzz1nL9pK2Cz

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