Stock a Has a Standard Deviation of 20% and a Correlation

question 40

Multiple Choice

Stock A has a standard deviation of 20% and a correlation coefficient of 0.64 with market returns.The expected return of the market is 12% with a standard deviation of 15%.The risk-free rate is 5%.What is the beta of Stock A?

• A)0.48
• B)0.75
• C)0.85
• D)1.33

---

Definitions:

Non-Cash Assets

Assets owned by a company that are not in the form of cash but may include items like equipment, real estate, and intellectual property.

Market Value

The current price at which an asset or service can be bought or sold in a public market.

Stock Split

A corporate action that increases the number of shares outstanding by issuing more shares to current shareholders, typically to make the stock more affordable.

Stockholders' Equity

The portion of the balance sheet that represents the owners' interest in the corporation, calculated as total assets minus total liabilities.