Company A's historical returns for the past three years were 6 percent, 15 percent, and 15 percent.Similarly, the market portfolio's returns were 10 percent, 10 percent, and 16 percent.Calculate the beta for Stock

Question

Quizplus · Accepted Answer

Beta is calculated as the covariance of the stock's returns with the market returns divided by the variance of the market returns. Using the given returns, the covariance is 0.005 and the variance is 0.0067, resulting in a beta of approximately 0.75.

Company A's Historical Returns for the Past Three Years Were