The Historical Nominal Returns for Stock a Were -8%,+10%,and +22

question 30

Multiple Choice

The historical nominal returns for stock A were -8%,+10%,and +22%.The nominal returns for the market portfolio were +6%,+18%,and 24% during this same time.Calculate the beta for stock

• A)1.64
• B)0.61
• C)1.00
• D)0.50

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Definitions:

Liquidity

The ease with which an asset or security can be converted into cash without affecting its market price.

Short-term Debt

Borrowings that are due for repayment within one year.

Common Size Analysis

A financial analysis technique that converts each line item of financial statements into a percentage of a base figure for easy comparison.

Base Amount

A reference amount from which adjustments are made, often used in calculations for taxes, benefits, or financial analysis.