The Correlation Coefficient Between a Stock and the Market Portfolio

question 13

Multiple Choice

The correlation coefficient between a stock and the market portfolio is +0.6.The standard deviation of return of the stock is 30% and that of the market portfolio is 20%.Calculate the beta of the stock.

• A)1.1
• B)1.0
• C)0.9
• D)0.6Cov

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Definitions:

Inventory Turnover

A measure of how many times a company's inventory is sold and replaced over a period, indicating the efficiency of inventory management.

Return on Assets

A profitability ratio that measures how effectively a company uses its assets to generate profit, calculated as net income divided by total assets.

Vertical Analysis

A financial analysis method that expresses each item in a financial statement as a percentage of a base amount to compare different years or companies.

Cost of Goods Sold

The immediate costs involved in making the products that a company sells, comprising both materials and labor.