Final answer:
Beta is a measurement of how a security's price movement is correlated with the market. A beta of 1 means the security's price moves with the market, while a beta greater than 1 or less than 1 indicates higher or lower volatility, respectively.
Step-by-step explanation:
Beta is a measure of security responsiveness to market movements or volatility. In finance, beta represents the tendency of a security's returns to respond to swings in the market. A beta of 1 indicates that the security's price will move with the market. A beta greater than 1 indicates that the security is more volatile than the market, while a beta less than 1 means it is less volatile. For instance, if a stock has a beta of 1.5, it is considered 50% more volatile than the broader market. This concept is vital in the Capital Asset Pricing Model (CAPM), which is used to evaluate the potential return of an investment and determine its risk-adjusted return.