Last year the market's return was 7% and Hare Growth earned 9%.This year the market was up and yielded 17%.If Hare Growth's Beta is 1.75,then what is Hare's return this year?
A) 12.25%
B) 15.75%
C) 17.50%
D) 24.50%
E) 26.50%

Question

Quizplus · Accepted Answer

Beta is the slope of the characteristic line. The slope is the rise over the run. In other words, the change in the y-axis variable (the stock) over the change in the x-axis variable (the market). Beta = 11ea7fdb_fc08_77de_a768_132308d96720_TB2902_11 Δk = Beta × Δk_M The market's return changed by +10% (from 7% to 17%) so: Δk = 1.75 × 10% = 17.50% Hare Growth's return this year is equal to its return last year plus the change in its return for this year: k = 9% + 17.50% = 26.5%

Last Year the Market's Return Was 7% and Hare Growth