NM Mining Company has a standard deviation on its common stock of 60 percent and a correlation with market returns of 0.65. The market's standard deviation and expected return are 15 percent and 14 percent, respectively, and the risk-free rate of return is 8 percent. What is NM Mining's beta?
A)3.5
B)2.6
C)1.0
D)0.06

Question

Quizplus · Accepted Answer

Beta = (standard deviation of stock / standard deviation of market) x correlation with market
Beta = (0.6 / 0.15) x 0.65
Beta = 2.6

NM Mining Company Has a Standard Deviation on Its Common