What stock a beta is

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Problem 1: Covariance of the market's return with a Stock A's return is 0.003 and the standard deviation of the market's return is 0.05. Stock A's beta is __________ the risk free rate is 6% and the expected market return is 15%. Stock A's current price is $25 and will pay a $1 dividend at the end of the year. if the stock is priced at $30 at year-end, it is ____________

a) 1.2; underpriced, so buy it

b) 1.5; underpriced , so buy it

c) 1.2 overpriced , so sell it

d) 1.5 overpriced, so sell it

e) none

Reference no: EM132782674

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