Stock a Has an Expected Return of 12 Percent and a Variance

question 28

Multiple Choice

Stock A has an expected return of 12 percent and a variance of .0203.The market has an expected return of 11 percent and a variance of .0093.What is the beta of Stock A if the covariance of Stock A with the market is .0137?

• A).68
• B).76
• C)1.55
• D)1.47
• E)1.32

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Definitions:

Marginal Cost

The supplementary expense arising from creating another unit of a product or service.

Profit-Maximizing

The process or strategy of adjusting production levels, prices, or other variables to generate the highest possible profit.

Total Cost

The sum of all expenditures incurred by a business to produce and sell a product, including fixed and variable costs.

Average Total Costs

The total cost of production divided by the number of units produced, reflecting the average cost per unit of output.