Discussion Post #4

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Colorado State University, Global Campus *

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Economics

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Feb 20, 2024

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Uploaded by ProfWaterPelican44

Use an online resource, such as Yahoo! Finance, and identify two firms one with a beta more than 1.5 and another with a beta of less than 0.7. Please do not duplicate firms that have already been chosen by a fellow student. To help prevent duplication, please note your chosen firms in the title of your posting. Report your findings to the class by naming the firms and their betas, describing their products, and explaining why you believe the beta seems predictable (or perhaps not predictable) for the firms chosen. Consider choosing a crypto currency firm. HSBC Holdings Plc (HSBC): 0.48 Century Casinos (CNTY): 1.62 As Bankrate points out, a beta is a method of measuring a stock’s volatility compared with the overall market volatility (McBride, 2022). The market as a whole will have a beta of 1 and everything else is defined based on its relationship to that number. If a stock has a value greater than 1 then that stock is more volatile than the market. This means that it has the potential to go up or down more than the market (McBride, 2022). In the opposite case, if a stock has a beta less than 1, then the movement is more muted than the overall market. There are also securities that can have a negative beta. This means they will move in the opposite direction of the market. For this assignment, I choose HSBC & Century Casinos. HSBC is a British multinational universal bank and financial services holding company. With a beta of 0.48, this is lower than the market beta of 1. Many banks have low betas as their business model has been around a long time and the business operations are very efficient. However, when looking at these betas, it is important to look at other indicators such as the company's profitability. The other company, Century Casinos, has a high beta of 1.62. Century Casinos, Inc. is a gaming company based in Colorado that also operates in other states in addition to casinos on TUI Cruises. Being in the casino industry, it makes sense that the stock is more volatile than a major commercial bank. Banking is universal and relatively stable whereas a casino is a “vice” industry that not everyone participates in. The beta of 1.62 means that Century Casinos has higher volatility than the market. Reference: Century Casinos, Inc. (CNTY) stock price Today, Quote & News. SeekingAlpha. (n.d.). Retrieved December 8, 2022, from https://seekingalpha.com/symbol/CNTY HSBC Holdings plc (HSBC) stock price Today, Quote & News. SeekingAlpha. (n.d.). Retrieved December 8, 2022, from https://seekingalpha.com/symbol/HSBC McBride, G. (2022, August 12). What beta means: How to evaluate a stock's risk . Bankrate. Retrieved December 8, 2022, from https://www.bankrate.com/investing/use-beta-to-evaluate- stock-risk/

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