You Have the Following Data on (1) the Average Annual $\mathrm{b}_{\mathrm{A}}>0 ; \mathrm{b}_{\mathrm{B}}=1$

question 22

Multiple Choice

You have the following data on (1) the average annual returns of the market for the past 5 years and (2) similar information on Stocks A and B. Which of the possible answers best describes the historical betas for A and B?

• A) \( \mathrm{b}_{\mathrm{A}}>0 ; \mathrm{b}_{\mathrm{B}}=1 \).
• B) \( \mathrm{b}_{\mathrm{A}}>+1 ; \mathrm{bB}_{\mathrm{B}}=0 \).
• C) \( \mathrm{b}_{\mathrm{A}}=0 ; \mathrm{bB}_{\mathrm{B}}=-1 \).
• D) \( \mathrm{b}_{\mathrm{A}}<0 ; \mathrm{b}_{\mathrm{B}}=0 \).
• E) \( b_{A}<-1 ; b_{B}=1 \).

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