You Are Given the Following Returns on "The Market" and Stock

question 2

Multiple Choice

You are given the following returns on "the market" and Stock F during the last three years.We could calculate beta using data for Years 1 and 2 and then,after Year 3,calculate a new beta for Years 2 and 3.How different are those two betas,i.e.,what's the value of beta 2 ? beta 1? (Hint: You can find betas using the Rise-Over-Run method,or using your calculator's regression function.) $$\begin{array} { c r r } \text { Year } & \text { Market } & \text { Stock F } \\1 & 6.10 \% & 6.50 \% \\2 & 12.90 \% & - 3.70 \% \\3 & 16.20 \% & 21.71 \%\end{array}$$

• A)7.89
• B)8.30
• C)8.74
• D)9.20
• E)9.66

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