1

beta

play
noun be·ta \ ˈbā-tə , chiefly British ˈbē- \
Updated on: 26 Jul 2017

Definition of beta

1 :the 2nd letter of the Greek alphabet — see Alphabet Table
3 :a measure of the risk potential of a stock or an investment portfolio expressed as a ratio of the stock's or portfolio's volatility to the volatility of the market as a whole
4 :a nearly complete prototype of a product (such as software)
  • the beta version
; also :a stage of development in which a product is nearly complete but not yet ready for release
  • released in beta

Examples of beta in a Sentence

  1. a program that is currently in beta

Recent Examples of beta from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'beta.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

Origin and Etymology of beta

Middle English betha, from Latin beta, from Greek bēta, of Semitic origin; akin to Hebrew bēth beth

Other Alphabet Terms


2

beta

adjective

Definition of beta

:second in position in the structure of an organic molecule from a particular group or atom
  • beta substitution
often used in combination symbol β

Recent Examples of beta from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'beta.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of beta

1862

Other Chemical Engineering Terms


Financial Definition of BETA

beta

What It Is

Beta is a measure of a stock's volatility relative to the overall market. It is most often calculated using a stock's movements relative to the S&P 500 Index over the trailing 12-month period.

How It Works

A stock's beta is determined by analyzing how much its return fluctuates in relation to the overall market return. A stock with a beta of 1.0 will tend to move higher and lower in lockstep with the overall market. Stocks with a beta greater than 1.0 tend to be more volatile than the market, and those with betas below 1.0 tend to be less volatile than the underlying index. Stocks with betas of zero generally move independently of the broader market. And finally, stocks with negative betas tend to move in the opposite direction relative to the broader market. When the S&P tumbles, stocks with negative betas will move higher, and vice versa.

For example, a stock with a beta of 2.0 is usually twice as volatile as the broader market. If the S&P 500 were to fall by -10% next year, then the stock would be expected to fall about -20% (assuming that the stock behaves similar to how it has in the past). The stock would also be expected to gain more in an up market.

Beta is a measure of systematic risk.

Why It Matters

The definition of beta on InvestingAnswersBeta can help investors choose investments that match their specific risk preferences. A risk-averse investor, for example, may want to avoid overweighting their portfolio with high-beta stocks to avoid excessive volatility.

Individual stock betas are extremely important when putting together a portfolio of assets. A diversified portfolio consisting of assets with different betas lowers the overall risk of the portfolio.

Investors should note that beta is calculated using past price fluctuations and does not ensure that a security will behave the same going forward. Beta is used (most frequently in the Capital Asset Pricing Model, or CAPM) to forecast expected return of a stock or portfolio, not the actual return.


BETA Defined for English Language Learners

beta

play
noun

Definition of beta for English Language Learners

  • : the second letter of the Greek alphabet

  • : a version of a product (such as a computer program) that is almost finished and that is used for testing


Medical Dictionary

1

beta

noun be·ta \ ˈbāt-ə, chiefly British ˈbē-tə \

medical Definition of beta

1 :the second letter of the Greek alphabet symbol Β or β

2

beta

adjective
variants: or β-

medical Definition of beta

1 :of or relating to one of two or more closely related chemical substances
  • the beta chain of hemoglobin
  • β-yohimbine
used somewhat arbitrarily to specify ordinal relationship or a particular physical form and especially one that is allotropic, isomeric, stereoisomeric, or sometimes polymeric (as in β-D-glucose)
2 :second in position in the structure of an organic molecule from a particular group or atom; also :occurring at or having a structure characterized by such a position
  • beta substitution
3 :producing a zone of decolorization when grown on blood media used of some hemolytic streptococci or of the hemolysis they cause


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