Suppose the following equation best describes the evolution of β over time:_t = 0.15 + 0.72β_t ₋₁.If a stock had a β of 1.05 last year, you would forecast the β to be _______ in the coming year. A) 0.91 B) 0.18 C) 0.63 D) 0.81

Question

Quizplus · Accepted Answer

The equation provided suggests that the evolution of β over time is influenced by its current value. Plugging in the given β of 1.05 into the equation: 0.15 + 0.72(1.05) = 0.906, which rounds to 0.91, indicating that the forecasted β for the coming year is 0.91.

Suppose the Following Equation Best Describes the Evolution of β