You have developed data which give (1) the average annual returns of the market for the past five years and (2) similar information on Stocks A and B. If these data are as follows, which of the possible answers best describes the historical beta for A and B? Please circle the correct answer: Years Market Stock A Stock B 1 .03 .16 .05 2 -.05 .20 .05 3 .01 .18 .05 4 -.10 .25 .05 5 .06 .14 .05 a. bA > 0; bB = 1. b. bA > +1; bB = 0. c. bA = 0; bB = -1. d. bA < 0; bB = 0. e. bA < -1; bB = 1.
You have developed data which give (1) the average annual returns of the market for the past five years and (2) similar information on Stocks A and B. If these data are as follows, which of the possible answers best describes the historical beta for A and B? Please circle the correct answer: Years Market Stock A Stock B 1 .03 .16 .05 2 -.05 .20 .05 3 .01 .18 .05 4 -.10 .25 .05 5 .06 .14 .05 a. bA > 0; bB = 1. b. bA > +1; bB = 0. c. bA = 0; bB = -1. d. bA < 0; bB = 0. e. bA < -1; bB = 1.
Chapter2: The Domestic And International Financial Marketplace
Section: Chapter Questions
Problem 1P
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You have developed data which give (1) the average annual returns of the market for the past five years and (2) similar information on Stocks A and B. If these data are as follows, which of the possible answers best describes the historical beta for A and B? Please circle the correct answer:
Years |
Market | Stock A | Stock B |
1 |
.03 | .16 | .05 |
2 | -.05 | .20 | .05 |
3 | .01 | .18 | .05 |
4 | -.10 | .25 | .05 |
5 | .06 | .14 | .05 |
a. bA > 0; bB = 1.
b. bA > +1; bB = 0.
c. bA = 0; bB = -1.
d. bA < 0; bB = 0.
e. bA < -1; bB = 1.
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