What is the Relation Between Market Risk and Beta ?

Beta describes an investment's sensitivity to market movements. It is a quantitative measure of the volatility of a given investment relative to the overall market.
Specifically, beta indicates the amount that investors expect an investment price to change for each additional 1% change in the market.

• United States Treasury bills have a beta of 0; the return is fixed and unaffected by market changes.
• The average beta of all stocks is 1.0.
• Stocks with a beta greater than 1.0 are unusually sensitive to market movements; they are said to amplify overall market movements.
• Stocks with a beta less than 1.0 are less sensitive to market movements. They tend to move in the same direction as the market but not as far.