The correlation between a stock and the market is 0.48. The standard deviation of the stock is 41 percent, and the standard deviation of the market is 23 percent. What is the beta of the stock?
A) 0.27
B) 0.58
C) 0.86
D) 0.71
E) 0.49

Question

Quizplus · Accepted Answer

Beta is calculated as the correlation between the stock and the market multiplied by the ratio of the standard deviation of the stock to the standard deviation of the market. Thus, Beta = 0.48 * (41/23) = 0.86.

The Correlation Between a Stock and the Market Is 0