The Correlation Coefficient Between Stock B and the Market Portfolio

question 61

Multiple Choice

The correlation coefficient between stock B and the market portfolio is 0.8. The standard deviation of stock B is 35 percent and that of the market is 20 percent. Calculate the beta of the stock.

• A)1.0
• B)1.4
• C)0.8
• D)0.7

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Definitions:

Social Structure

The organized pattern of relationships and social institutions that together compose society, including roles, classes, and social hierarchies.

Republican Society

A social order that emphasizes the welfare of the community and operates on principles of democracy and the rule of law, often in contrast to a monarchy or dictatorship.

Common Good

The benefit or interests of all participants in a society, considered as a guiding principle for governance and public policy.

Standard Deviation

A measure of the dispersion or variability of a set of values around the mean.