Explain alpha and beta in portfolio performance measurement.

Explain alpha and beta in portfolio performance measurement.

• A. Beta measures market risk exposure; alpha measures performance relative to the benchmark after adjustments for risk.
• B. Alpha measures market risk exposure; beta measures performance relative to the benchmark after adjustments for risk.
• C. Beta measures liquidity; alpha measures volatility.
• D. Alpha and beta are both measures of expense ratios.

Answer: (A)