You observe that AT&T stock and the S&P 500 have the following weekly returns:
If this pattern of stock returns is typical of AT&T stock,and you calculated a beta against the S&P 500,which of the following is true?

Question

You observe that AT&T stock and the S&P 500 have the following weekly returns: 
If this pattern of stock returns is typical of AT&T stock,and you calculated a beta against the S&P 500,which of the following is true?

Quizplus · Accepted Answer

The question states that the pattern of stock returns is typical of AT&T stock, which means that AT&T stock has a positive correlation with the S&P 500. Since beta measures the sensitivity of a stock's returns to the market returns, a positive correlation implies a positive beta. Therefore, the correct answer is C: AT&T's beta is positive.

You Observe That AT&T Stock and the S&P 500 Have