Suppose the Following Equation Best Describes the Evolution Of $\beta$ Over Time

question 58

Multiple Choice

Suppose the following equation best describes the evolution of $\beta$ over time: $\beta$ _t = 0.3 + 0.2 $\beta$ _{t - 1}
If a stock had a $\beta$ of 0.8 last year, you would forecast the $\beta$ to be _______ in the coming year.

• A)0.46
• B)0.60
• C)0.70
• D)0.94

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Definitions:

Annuity

An annuity is a financial product that pays out a fixed stream of payments to an individual, typically used as an income stream for retirees.

Annual Interest

Annual interest is the amount of interest due over the course of a year on borrowed funds or invested capital.

Contract Rate

The agreed-upon rate specified in a contract for services or lending/borrowing, which could refer to interest rates or payment amounts for contractual services.

Bond

A debt security under which the issuer owes the holder a debt and is obliged to pay interest and/or to repay the principal at a later date.