Suppose the Following Equation Best Describes the Evolution of β

question 80

Multiple Choice

Suppose the following equation best describes the evolution of β over time: _t = 0.18 + 0.63β_{t - 1}.
If a stock had a β of 1.09 last year, you would forecast the β to be _______ in the coming year.

• A) 0.87
• B) 0.18
• C) 0.63
• D) 0.81

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