Estimate a Stock's Beta Based on the Following Information: Month

question 103

Multiple Choice

Estimate a stock's beta based on the following information: Month 1 = Stock + 1.5%,Market + 1.1%; Month 2 = Stock + 2.0%,Market + 1.4%; Month 3 = Stock − 2.5%,Market − 2.0%.

• A) Greater than 1.0
• B) Less than 1.0
• C) Equal to 1.0
• D) Indeterminate

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Definitions:

Cash Inflows

The total amount of money being transferred into a business, typically from operations, investments, and financing activities.

Exchange Rate

The price at which one currency can be exchanged for another in the foreign exchange market.

Inflation Rate

The speed of growth in the average price level of goods and services, decreasing the effectiveness of purchasing power.

Exchange Rate

The value of one currency for the purpose of conversion to another, dictating how much one currency is worth in terms of another.