What does Beta measure in finance?

In finance, Beta is a measure of a stock's volatility in relation to the broader market. It quantifies the sensitivity of a stock's returns to changes in the market's returns. A Beta greater than 1 indicates that the stock is more volatile than the market; if the market goes up, the stock is expected to go up more, and if the market goes down, it is expected to fall more. Conversely, a Beta of less than 1 means that the stock is less volatile than the market. This measure helps investors understand the risk associated with a particular stock in the context of market movements.

The other options relate to different financial concepts. Company revenue growth focuses on the increase in sales over time, which does not directly indicate volatility. Stock liquidity pertains to how easily a stock can be bought or sold without affecting its price, while investor sentiment encompasses the overall attitude of investors towards a company's stock, which can influence stock prices but is not a direct measure of volatility or risk. Therefore, Beta specifically captures how a stock's price fluctuates compared to market trends, making it the correct answer.