You Are Given the Following Returns on "The Market" and Stock

question 28

Multiple Choice

You are given the following returns on "the market" and Stock F during the last three years.We could calculate beta using data for Years 1 and 2 and then,after Year 3,calculate a new beta for Years 2 and 3.How different are those two betas,i.e.,what's the value of beta 2 - beta 1? (Hint: You can find betas using the Rise-Over-Run method,or using your calculator's regression function.)
$\begin{array}{ccc}\text { Year } &\text { Market }& {\text { Stock F }} \\1 & 6.10 \% & 6.50 \% \\2 & 12.90 \% & -3.70 \% \\3 & 1620 \% & 2171 \%\end{array}$

• A) 7.89
• B) 8.30
• C) 8.74
• D) 9.20
• E) 9.66

---

Definitions:

CPI

The Consumer Price Index is a metric that calculates the average cost of a selection of consumer items and services, including food, transportation, and healthcare, by looking at their weighted average prices.

Inventory Cycles

Fluctuations in inventory levels within industries or businesses, affected by changes in demand, supply chain dynamics, and production planning.

Manufacturing Role

The sector of an economy dedicated to the production of goods through the processing of raw materials.

Market Basket

A market basket is a collection of goods and services used to track price changes and inflation within an economy.