$\begin{array}{llcc}
\text {Expected return on the market } &13\% \
\text { Standard deviation of the market } &21\%\
\text { Risk-free rate} &5.5\%\
\text { Correlation coefficient between }&\
\text { Stock A and the market } & 0.65 \
\text { Stock B and the market } & 0.28 \
\text { Standard deviation of Stock A } & 64 \% \
\text { Standard deviation of Stock B } & 53 \%
\end{array}$

-What is the beta of Stock B?
A) 0.71
B) 0.89
C) 0.78
D) 0.84
E) 0.93

Question

$\begin{array}{llcc}
  \text {Expected return on the market   } &13\%  \
 \text { Standard deviation of the market } &21\%\
 \text {  Risk-free rate} &5.5\%\
\text { Correlation coefficient between }&\
\text { Stock A and the market } & 0.65 \
\text { Stock B and the market } & 0.28 \
\text { Standard deviation of Stock A } & 64 \% \
\text { Standard deviation of Stock B } & 53 \%
\end{array}$

-What is the beta of Stock B?
A) 0.71
B) 0.89
C) 0.78
D) 0.84
E) 0.93

Quizplus · Accepted Answer

The beta of Stock B is calculated using the formula: $\beta = \frac{\text{Correlation with market} \times \text{Standard deviation of Stock B}}{\text{Standard deviation of the market}}$. Substituting the given values: $\beta = \frac{0.28 \times 53\%}{21\%} = 0.71$.

-What Is the Beta of Stock B? A) 0

-What Is the Beta of Stock B?
A) 0