The Correlation Coefficient Between a Stock and the Market Portfolio

question 47

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 percent and that of the market portfolio is 20 percent. Calculate the beta of the stock.

• A)1.1
• B)1.0
• C)0.9
• D)0.6

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Definitions:

Phenytoin

An anticonvulsant medication used to control certain types of seizures and to prevent seizures following neurosurgery.

Furosemide

A diuretic medication used to treat fluid build-up due to heart failure, liver scarring, or kidney disease.

Glyburide

A medication used to treat type 2 diabetes by stimulating the pancreas to produce more insulin.

Heparin

A medication used as an anticoagulant to prevent and treat blood clots, often administered intravenously or via injection.