Estimate a stock's beta based on the following information: Month 1 = Stock + 1.5%,Market + 1.1%; Month 2 = Stock + 2.0%,Market + 1.4%; Month 3 = Stock − 2.5%,Market − 2.0%.
A) Greater than 1.0
B) Less than 1.0
C) Equal to 1.0
D) Indeterminate

Question

Quizplus · Accepted Answer

The stock's returns are more volatile than the market's returns, indicating a beta greater than 1.0.

Estimate a Stock's Beta Based on the Following Information: Month