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Beta

Beta measures a security’s sensitivity to movements by the market.  A Beta of 1.0 means that the security’s price moves in lock-step with the market.  A Beta of over 1 means the security’s price moves up (down) more than the market moves up (down).  A Beta of under 1.0 means that the security’s price moves up (down) less than the market moves up (down).  Beta is also used in private equity to denote the portion of returns that are due to market factors, while Alpha refers to the returns generated by the active management of the fund manager.

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