Based on the following information, make an estimate of the stock's Beta: Month 1 = Stock + 1.5%, Market + 1.1%; Month 2 = Stock + 2.0%, Market + 1.4%; Month 3 = Stock -2.5%, Market -2.0%.
A)Beta is greater than 1.0
B)Beta is less than 1.0
C)Beta equals 1.0
D)there is no consistent pattern of returns.

Question

Quizplus · Accepted Answer

Based on the given information, the stock's returns are consistently more volatile than the market's returns, as evidenced by the higher percentage changes in both positive and negative directions. This suggests a Beta greater than 1.0, indicating a higher level of risk than the overall market.

Based on the Following Information, Make an Estimate of the Stock's