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

question 65

Multiple Choice

Suppose the following equation best describes the evolution of $\beta$ over time: $\beta$ _t = 0.4 + 0.6 $\beta$ _{t - 1}.
If a stock had a $\beta$ of 0.9 last year, you would forecast the $\beta$ to be _______ in the coming year.

• A)0.45
• B)0.60
• C)0.70
• D)0.94

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