You observe that Telstra shares and the S&P/ASX 200 index have the following weekly returns: If this pattern of returns is typical of Telstra shares, and you calculated a beta against the S&P/ASX 200, which of the following is true?

Question

You observe that Telstra shares and the S&P/ASX 200 index have the following weekly returns:  If this pattern of returns is typical of Telstra shares, and you calculated a beta against the S&P/ASX 200, which of the following is true?

Quizplus · Accepted Answer

The prompt states that the pattern of returns between Telstra shares and the S&P/ASX 200 index is typical, which suggests a positive correlation between the two. Therefore, Telstra's beta would be positive as it moves in the same direction as the market index.

You Observe That Telstra Shares and the S&P/ASX 200 Index