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. If these data are as follows, which of the possible answers best describes the historical betas for A and B? Years Market Stock A Stock B 1 0.03 0.16 0.05 2. -0.05 0.20 0.05 3 0.01 0.18 0.05 -0.10 0.25 0.05 5 0.06 0.14 0.05 Choose the correct answer: a) BA > 0: Be = 1 b) BA > +1: BB - 0 BA-0: 88 - - 1 BA 0: Be - 0 BA-1: Be - 1

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