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Beta is used in portfolio management to measure a stock or portfolio's sensitivity to market movements. It quantifies the asset's volatility in relation to a benchmark, often the overall market represented by an index like the S&P 500. A beta of 1 indicates the asset tends to move in line with the market, while a beta greater than 1 suggests higher volatility, and a beta less than 1 implies lower volatility. Portfolio managers use beta to assess risk and make strategic decisions on asset allocation, aiming to balance portfolios based on desired levels of risk and return.
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A stock split increases the number of shares outstanding while proportionally reducing the stock price. Although the total value of your investment remains the same, you will own more shares at a lower price per share. Stock splits do not inherently impact the company's overall market value or your ownership stake, but they can enhance liquidity and potentially make the stock more accessible to a broader range of investors.
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