The Historical Returns for the Past Four Years for Stock

question 21

Multiple Choice

The historical returns for the past four years for Stock C and the stock market portfolio were Stock C: 10 percent, 30 percent, 20 percent, 20 percent; market portfolio: 5 percent, 15 percent, 25 percent, 15 percent.Calculate the beta of Stock C.

• A)0.86
• B)0.50
• C)1.50
• D)0.38

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Definitions:

Variable Costing

A managerial accounting method that only considers variable costs as product costs, with fixed overhead costs treated as period expenses.

Variable Costing

A costing method that includes only variable manufacturing costs — direct materials, direct labor, and variable manufacturing overhead — in the cost of a product.

Unit Product Cost

The total cost incurred to produce, package, and place a product ready for sale, divided by the number of units produced.

Absorption Costing

An accounting method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed overhead—in the cost of a product.