Estimates of a stock's beta may vary depending on
I. when the estimate was made.
II. the risk-free rate of interest used.
III. how many months of returns were used to estimate the beta.
IV. the index used to represent market returns.
A) I, II and IV only
B) II and IV only
C) I, III and IV only
D) I, II and III only

Question

Quizplus · Accepted Answer

Estimates of a stock's beta can vary due to the timing of the estimate (I), the length of the return period used in the calculation (III), and the choice of market index to represent market returns (IV). The risk-free rate of interest (II) does not directly affect the beta estimate, as beta measures a stock's volatility relative to the market, not the risk-free rate.

Estimates of a Stock's Beta May Vary Depending on