Glossary term
Beta
Beta is a measure used in finance formulas to describe how sensitive an asset is to broad market movement.
Plain meaning
What beta means
In a simplified finance model, a beta of 1.0 means the asset is treated as moving with the broad market. A beta above 1.0 indicates greater modeled sensitivity. A beta below 1.0 indicates lower modeled sensitivity.
Formula role
How OpenBook uses it
OpenBook uses beta as an input in the capital asset pricing model. It scales the market risk premium in the required-return formula.
Common limitation
Why beta is not the whole risk picture
Beta is a narrow model input. It does not capture all business, liquidity, concentration, tax, currency, or personal planning risks.