Question 3Covariance of stock and index returns is 0.003, variance of index returns is 0.004. Calculate the beta1 point0.751.312
Question
Solution 1
The beta of a stock is calculated by dividing the covariance of the stock and index returns by the variance of the index returns.
Given: Covariance of stock and index returns = 0.003 Variance of index returns = 0.004
Beta = Covariance / Variance
So, Beta = 0.003 / 0.004 = 0.75
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Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study problem.
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