Suppose the following equation best describes the evolution of $\beta$ over time: $\beta$ _t = 0.3 + 0.2 $\beta$ _t_{- 1}
If a stock had a $\beta$ of 0.8 last year, you would forecast the $\beta$ to be _______ in the coming year.

Question

Suppose the following equation best describes the evolution of

\beta

over time:

\beta

_t = 0.3 + 0.2

\beta

_t_{- 1}
If a stock had a

\beta

of 0.8 last year, you would forecast the

\beta

to be _______ in the coming year.

Quizplus · Accepted Answer

The equation provided suggests a linear relationship with a base value of 0.3 and a multiplier of 0.2 applied to the previous year's value (in this case, 0.8). Plugging in 0.8 for the variable gives 0.3 + 0.2(0.8) = 0.46.

Suppose the Following Equation Best Describes the Evolution Of β\betaβ Over Time

Suppose the Following Equation Best Describes the Evolution Of $\beta$ Over Time