You Observe That AT&T Stock and the S&P 500 Have

question 23

Multiple Choice

You observe that AT&T stock and the S&P 500 have the following weekly returns: If this pattern of stock returns is typical of AT&T stock, and you calculated a beta against the S&P 500, which of the following is true?

• A) AT&T's beta is negative.
• B) AT&T's beta is zero.
• C) AT&T's beta is positive.
• D) Cannot be determined from information given.

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Definitions:

Risk-Free Rate

The risk-free rate is the theoretical return on an investment with zero risk, serving as a benchmark for measuring investment performance.

Market Risk Premium

The additional return an investor expects from holding a risky market portfolio instead of risk-free assets, critical for assessing investment risk.

Risk-Free Rate

The risk-free rate is the theoretical return on investment with no risk of financial loss, often represented by the yield on government securities.