The Correlation Coefficient Between Stock a and the Market Portfolio

question 7

Multiple Choice

The correlation coefficient between stock A and the market portfolio is +0.6. The standard deviation of return of the stock is 30% and that of the market portfolio is 20%. Calculate the beta of the stock.

• A) 1.1
• B) 1.0
• C) 0.9
• D) 0.6

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Definitions:

Thalamus

A brain structure acting as a relay station, directing sensory and motor signals to the cerebral cortex, except for the sense of smell.

Cerebral Cortex

The outermost layer of the brain, involved in high-level functions such as thinking, perception, and decision-making.

Amygdala

A pair of almond-shaped masses of gray matter inside each cerebral hemisphere, involved with the experiencing of emotions, such as fear and pleasure.

Complex Emotional

Emotional states that involve a mixture of emotions or feelings that are more nuanced and less straightforward than basic emotions.