What are the characteristics of an epic as a literary work?
Briefly, the characteristics of an epic are that it have a hero who performs heroic deeds, it should have an exhaulted, dignified style of narrative, it should have a complex narrative, and it should have historic references and ties in it. Beowulf fits all those characteristics. Beowulf himself is the hero and his slaying of Grendel, Grendel's mother, and the dragon are very heroic deeds. Since what we read is a translation, we have to rely on the quality of the translation to give us the style of the narrative. Generally though, we are shown many literary devices such as kennings, alliterative verse, etc. to give us the dignified style. The complex narrative is seen in the many story lines that are introduced into the story such as the Finn episode or the retelling of the conflict between the Swedes and the Geats. Finally, the story gives us insight into battles that took place in that era, and into life itself in that era thus making it have historic significance.
An epic is usually in the form of a long, narrative poem. The main characteristic is that it tells the trials and triumphs of a hero, and this hero is the embodiment of the values and beliefs of the culture in which the tale is told. Examples of epics include Beowulf, The Song of Roland, The Iliad, The Odyssey, Gilgamesh, Ramayana, or Sundiata.
Since it is a narrative poem it would contain all of the elements of fiction, much like a short story. There are characters, setting, plot, climax, and so forth.