Question: You have developed data which give (1) the average annual returns on the market for the past five years, and (2) similar information on Stocks

You have developed data which give (1) the average annual returns on the market for the past five years, and (2) similar information on Stocks A and B. In year 1, the market portfolio returned .13, stock A returned .16 and Stock B returned .04. In year 2, the market returned -.15, stock A returned -.20 and stock B returned .04. In year 3 the market returned .11, stock A returned .18 and stock B returned .04. In year 4, market returned -.10, stock A returned -.15, and stock B returned.04. In year the market returned .06, stock A returned .14 and stock B returned .04. If these data are as follows, which of the possible answers best describes the historical betas for A(bA) and B(bB)?

bA>0;bB=1 or bA>+1;bB=0 or bA=0;bB=-1 or bA<0;bB=0 or bA<-1;bB=1

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