If asset x has a standard deviation of 10 percent, and the market portfolio has a standard deviation of 20 percent, and the correlation of their returns is .5, what is the beta?
A)1.0
B).5
C).25
D)0

Question

Quizplus · Accepted Answer

Beta is calculated as the correlation between the asset and the market portfolio multiplied by the ratio of the asset's standard deviation to the market's standard deviation. Here, beta = 0.5 * (10% / 20%) = 0.25.

If Asset X Has a Standard Deviation of 10 Percent