What Is The Beta Of A Stock With The Following?

The standard deviation of a market index is 8%. What is the beta of a stock whose covariance with market index is 0.006. The answer is 0.94, but how do you get it?

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This entry was posted on Sunday, February 28th, 2010 at 6:43 pm and is filed under Stock. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

One Response to “What Is The Beta Of A Stock With The Following?”

  1. According to wikipedia, the formula works like this.
    .006/.08=.075
    If the beta is really .94, then there’s probably something wrong with your covariance figure, which I would imagine would be higher anyways.

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