Western Exports Stock Has a Standard Deviation of 15

question 61

Multiple Choice

Western Exports stock has a standard deviation of 15.6 percent and a covariance with the market of 0.0150.The market has a standard deviation of 13.7 percent.What is the correlation of this stock with the market?

• A) 0.58
• B) 0.61
• C) 0.68
• D) 0.70
• E) 0.77

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Definitions:

WACC

By employing the Weighted Average Cost of Capital calculation, a company's cost of capital is assessed, with each type of capital weighted proportionately.

Payback

The period of time required to recover the cost of an investment.

NPV

Net Present Value: a capital budgeting technique that determines the profitability of a project or investment.

WACC

A firm's Weighted Average Cost of Capital is derived by calculating the cost of capital for each capital category and then weighting these costs according to each category's presence in the total capital structure.