1 - What is beta? 2 - Stock ABC has a beta of 1.25 and Stock XYZ...

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1 - What is beta?

2 - Stock ABC has a beta of 1.25 and Stock XYZ has a beta of 0.55. Which stock would you buy if you knew the stock market was going to drop by 20% over the next month? Also, briefly explain why.

3 - What is the relationship between the market risk of a stock and its expected return?

4 - What is the CAPM? What does it tell you?

5 - What is the difference between beta and standard deviation?

Directions: Please write brief (3-5 sentences) responses to each of the above questions.

Related Book For answer-question

Money Banking and Financial Markets

ISBN: 978-0078021749

4th edition

Authors: Stephen Cecchetti, Kermit Schoenholtz

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Posted Date: Apr 11, 2024 08:13 PM

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1 - What is beta? 2 - Stock ABC has a beta of 1.25 and Stock XYZ...

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Expert Answer:

1 Beta is a measure of the volatility or systematic risk of a stock or portfolio in comparison to th... View the full answer

Money Banking and Financial Markets

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