Consider the following average annual returns for Stocks A and B and the Market. Which of the possible answers best describes the historical betas for A and B? Years Market Stock A Stock B 1 0.03 0.16 0.05 2 −0.05 0.20 0.05 3 0.01 0.18 0.05 4 −0.10 0.25 0.05 5 0.06 0.14 0.05 a. bA > +1; bB = 0. b. bA = 0; bB = −1. c. bA < 0; bB = 0. d. bA < −1; bB = 1. e. bA > 0; bB = 1.
Consider the following average annual returns for Stocks A and B and the Market. Which of the possible answers best describes the historical betas for A and B? Years Market Stock A Stock B 1 0.03 0.16 0.05 2 −0.05 0.20 0.05 3 0.01 0.18 0.05 4 −0.10 0.25 0.05 5 0.06 0.14 0.05 a. bA > +1; bB = 0. b. bA = 0; bB = −1. c. bA < 0; bB = 0. d. bA < −1; bB = 1. e. bA > 0; bB = 1.
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 20P
Related questions
Question
Consider the following average annual returns for Stocks A and B and the Market. Which of the possible answers best describes the historical betas for A and B?
|
Years |
Market |
Stock A |
Stock B |
|
1 |
0.03 |
0.16 |
0.05 |
|
2 |
−0.05 |
0.20 |
0.05 |
|
3 |
0.01 |
0.18 |
0.05 |
|
4 |
−0.10 |
0.25 |
0.05 |
|
5 |
0.06 |
0.14 |
0.05 |
a. bA > +1; bB = 0.
b. bA = 0; bB = −1.
c. bA < 0; bB = 0.
d. bA < −1; bB = 1.
e. bA > 0; bB = 1.
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