Question: You have the following data on the average annual returns of the market, stock A, and stock B for the past 5 years. Which of

You have the following data on the average annual returns of the market, stock A, and stock B for the past 5 years. Which of the possible answers best describes the historical betas for A and B?

Year Market Stock A Stock B
2013 0.03 -0.16 0.05
2014 -0.05 0.2 0.05
2015 0.01 -0.03 0.05
2016 -0.1 0.25 0.05
2017 0.06 -0.18 0.05

a) A > 0; B = 1

b) A > 1; B = 0

c) A = 0; B = -1

d) A < 0; B = 0

e) More information is required.

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