Final answer:
Beta is used in the CAPM to measure the systematic risk of a stock and is calculated as the slope of the regression line between the stock and market index returns. It does not estimate the cost of debt capital.
Step-by-step explanation:
In the Capital Asset Pricing Model (CAPM), beta is indeed a crucial measure of the systematic risk associated with a stock. It is estimated as the slope of a regression line that reflects the relationship between the returns of an individual security and the returns of the overall market index. This statistical measure quantifies the stock's sensitivity to market movements and indicates how much systematic risk it carries.
Beta is particularly valuable in assessing an investment's risk and return profile, helping investors make informed decisions. Contrary to estimating a firm's cost of debt capital, beta is primarily associated with the equity risk premium and plays a pivotal role in calculating the expected return on equity. Thus, option c), stating that beta is one measure of the systematic risk of a stock, accurately captures its significance within the framework of the CAPM.