You Observe That Telstra Shares and the S&P/ASX 200 Index

question 96

Multiple Choice

You observe that Telstra shares and the S&P/ASX 200 index have the following weekly returns: $$\begin{array} { c c c } \text { Week } & \text { Telstra return } & \text { S\&P/ASX 200 return } \\\hline 1 & 0.005 & 0.001 \\2 & 0.010 & 0.005 \\3 & - 0.003 & - 0.005 \\4 & - 0.005 & - 0.001\end{array}$$ If this pattern of returns is typical of Telstra shares, and you calculated a beta against the S&P/ASX 200, which of the following is true?

• A) Telstra's beta is positive.
• B) Telstra's beta is negative.
• C) Telstra's beta is zero.
• D) Cannot be determined from information given.

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Definitions:

Liquidity

A measure of how easily assets can be converted into cash without significant loss in value, important for meeting short-term obligations.

Times Interest Earned

A financial ratio that measures a company's ability to meet its interest obligations on outstanding debt.

Interest Expense

The cost incurred by an entity for borrowed funds.

Income Before Income Tax

Income Before Income Tax is a financial metric indicating the amount of profit a company makes before applying income tax expenses.