-The Market Has a Standard Deviation of 13

question 37

Multiple Choice

$\begin{array}{c}\begin{array}{c}\underline{\text { Year }} \\1 \\2 \\3 \\4\end{array}\begin{array}{c}\underline{\text {Stock X}}\\-27 \% \\6 \% \\34 \%\\11\%\end{array}\begin{array}{c}\underline{\text { Market } }\\-7 \% \\11 \% \\18 \% \\10\%\end{array}\end{array}$


-The market has a standard deviation of 13.6% while a risky stock has a standard deviation of 22.4%. The covariance of the stock with the market is 0.012. What is the beta of the stock?

• A) 1.05
• B) -1.27
• C) 0.49
• D) 0.38
• E) 0.65

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Definitions:

Light Colored

Referring to materials or objects that have low absorption of light, typically reflecting most wavelengths of light visible to human eyes.

Transparent

A material's ability to allow light to pass through it so that objects behind can be distinctly seen.

Hardness

A measure of how resistant a material is to deformation, scratching, or penetration.

Fractures

Breaks or cracks in rock or bone, often resulting from stress or impact.