A stock has a standard deviation of 25.4 percent and a covariance with the market of .0160.The market has a standard deviation of 12.2 percent.What is the beta of this stock?
A).294
B).572
C).926
D).973
E)1.075

Question

Quizplus · Accepted Answer

Beta is calculated as the covariance of the stock with the market divided by the variance of the market. The variance of the market is the square of the market's standard deviation (0.122^2 = 0.014884). Therefore, beta = 0.0160 / 0.014884 = 1.075.

A Stock Has a Standard Deviation of 25