a stock has an expected return of 12.37 percent and its reward-to-risk ratio is 7.5 percent. if the risk-free rate is 3.15 percent, what is the stock's beta? multiple choice 1.11 1.44 1.65 1.38 1.23

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07-12-2022
Business

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a stock has an expected return of 12.37 percent and its reward-to-risk ratio is 7.5 percent. if the risk-free rate is 3.15 percent, what is the stock's beta? multiple choice 1.11 1.44 1.65 1.38 1.23

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akursharma9034 akursharma9034 · Answer 1 · 2022-12-10T04:13:59-05:00

Beta=(Expected return - Risk free return)/ Market risk premium

=12.37/ 7.5* 3.15=5.195

The standard deviation of returns for the asset could be divided by the standard deviation of returns for the benchmark to determine beta. The correlation between the security's returns and the benchmark's returns is compounded to arrive at the final figure. The term "beta" describes how a stock is predicted to change in proportion to market movements. A stock with a beta larger than 1.0 is thought to be more volatile than the overall market, whereas one with a beta below 1.0 is thought to be less volatile.

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