A Stock Has a Standard Deviation of 21

question 43

Multiple Choice

A stock has a standard deviation of 21.0% and a covariance with the market of .0110. The market has a standard deviation of 12.0%. What is the beta of this stock?

• A).294
• B).572
• C).764
• D).973
• E)1.075

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Definitions:

Assumption's Probability Distribution

The theoretical distribution of probabilities assigned to all possible values of a variable based on certain assumptions.

NPV

Net Present Value; a financial metric used to evaluate the profitability of an investment, calculated by subtracting the present value of cash outflows from the present value of cash inflows.

Percentage Of Risk

The proportion of risk involved in a particular investment or business decision, often expressed as a percentage.

Market Size

An estimate of the demand for a product or service within a particular market.