If a firm's beta was calculated as 0.6 in a regression equation,Merrill Lynch would state the adjusted beta at a number
A) less than 0.6 but greater than zero.
B) between 0.6 and 1.0.
C) between 1.0 and 1.6.
D) greater than 1.6.
E) zero or less.

Question

Quizplus · Accepted Answer

The adjusted beta is typically calculated using the formula: Adjusted Beta = (0.67 * Raw Beta) + (0.33 * 1.0). This formula moves the beta towards the market average of 1.0, so a beta of 0.6 would be adjusted to a value between 0.6 and 1.0.

If a Firm's Beta Was Calculated as 0