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Technology Stocks : Apple Inc.

AAPL 267.26

-1.4%

Jan 5 3:59 PM EST

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To: Linda Kaplan who wrote (12264)	4/28/1998 6:09:00 AM
From: Moominoid	Read Replies (1) of 213178

David, You're using Beta in a different way than that with which I'm familiar. Beta is a measure of the volatility of the stock. Is that what you mean to say, rather than the p/e? Linda I'm not sure why you say p/e as that wasn't mentioned in my message. According to the CAPM theory though P/E is a decreasing function of beta when prices are in equilibrium. Beta is the regression slope coefficient in a regression of excess returns (ie above the risk free rate) of a stock on excess returns to some market portfolio. Typically this is the S&P 500 index though that is not theoretically broad enough. This means beta is closely related to the correlation between the returns to a stock and the returns to the market as a whole. Apple for example has been a fairly volatile stock as measured by the standard deviation of its returns but its beta has been low. Currently the volatility is declining and beta is rising as it falls in line with the rest of market as its recovery proceeds. Apple has been a relatively dangerous stock for somebody who isn't well diversified but a relatively safe stock for someone who is well-diversified. David

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