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World beta concept of a security

Explain the world beta concept of a security.

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World beta measures the sensitivity of returns to security to returns to the world market portfolio. It is the measure of systematic risk of the security in global setting. Statistically, world beta is defined as:

Cov(Ri, RM)/Var(RM),

where :

Ri and RM are returns to the Ith security and the world market portfolio, respectively.

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