Consider the Following Average Annual Returns for Stocks a and B

question 29

Multiple Choice

Consider the following average annual returns for Stocks A and B and the Market.Which of the possible answers best describes the historical betas for A and B?
$\begin{array}{cc}\text { \underline{Years }} &\text { \underline{Market} } & \text { \underline{Stack A }} & \text { \underline{Stack B} } \\1&0.03& 0.16&0.05\\2 & -0.05&0.20 &0.05 \\3 & 0.01&0.18 & 0.05\\4 & -0.10 &0.25 &0.05\\5 & 006& 0.14&0.05\end{array}$

• A) b_A > +1; b_B = 0.
• B) b_A = 0; b_B = -1.
• C) b_A < 0; b_B = 0.
• D) b_A < -1; b_B = 1.
• E) b_A > 0; b_B = 1.

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Definitions:

Accounts Listed

Refers to the specific accounts recorded in a company's financial statements or ledgers.

Order

A request by a customer for a company to provide goods or services at a specified price and time.

Account Balance

The total amount of money in a financial account, calculated by adding all credits and subtracting all debits.

Credits

Accounting entries that increase liabilities or decrease assets, typically reflecting the sources of value in transactions.