Stock A has a standard deviation of 20% and a correlation coefficient of 0.64 with market returns.The expected return of the market is 12% with a standard deviation of 15%.The risk-free rate is 5%.What is the beta of Stock A?
A)0.48
B)0.75
C)0.85
D)1.33

Question

Quizplus · Accepted Answer

Beta is calculated as the product of the correlation coefficient and the ratio of the stock's standard deviation to the market's standard deviation: Beta = 0.64 * (20% / 15%) = 0.85.

Stock a Has a Standard Deviation of 20% and a Correlation