You observe that AT&T stock and the S&P 500 have the following weekly returns: Week AT&T return S&P 500 return
1 0.005 0.001
2 0.010 0.005
3 -0.003 -0.005
4 -0.005 -0.001
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

Quizplus · Accepted Answer

A beta measures a stock's volatility relative to the market. A positive beta means the stock is likely to move in the same direction as the market, while a negative beta means it's likely to move in the opposite direction. Since the weekly returns of AT&T and the S&P 500 have generally moved in the same direction, with both positive and negative returns occurring together, it's likely that AT&T's beta is positive, meaning it's generally in line with the market. However, we can't determine the exact value of the beta without further data and calculations.

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