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What does the difference in beta values indicate

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The "beta" value of Amazon shares is about 1.7. The "beta" value of WalMart shares is about 0.3.

According to Standard and Poors, WalMart's bond rating is AA and Amazon's rating is AA!.

(a) What does the difference in beta values indicate?

(b) What does the difference in bond ratings indicate?

(c) What is meant by the riskiness of a stock? Can you determine, from the information provided, which of the two stocks is "riskier"?

(d) Based on the information provided, do you expect Amazon stock or WalMart stock to produce a higher rate of return for the stockholder, or are the indications am biguous?

(e) Suppose that you had private information indicating that the economy is about to go into recession, information that you believe has not yet been incorporated into stock prices. How could this change your answer to part (d)?

Reference no: EM132389396

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