The Market Has a Standard Deviation of 10

question 85

Multiple Choice

The market has a standard deviation of 10.8 percent (0.108) while a risky security has a standard deviation of 22.5 (0.225) percent.The covariance of the stock with the market is .0149.What is the beta of the stock?

• A) 1.09
• B) 1.11
• C) 1.15
• D) 1.19
• E) 1.28

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Definitions:

Predictive Validity

A measure of how well a test score or outcome can predict future performance, behavior, or outcomes in a related area.

Cognitive Ability

The capacity to perform higher mental processes of reasoning, remembering, understanding, problem solving, and decision making.

Cognitive Ability

Refers to the capacity of an individual to perform mental tasks, including learning, understanding, problem-solving, reasoning, and remembering.

Content Areas

Distinct domains or categories of knowledge and skills that are assessed or taught, often within educational settings.