Consider the following average annual returns for Stocks A and B and the Market. 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
4
?0.10
0.25
0.05
5
  0.06
0.14
0.05

A. bA> +1; bB = 0.
B. bA = 0; bB = ?1.
C. bA< 0; bB = 0.
D. bA< ?1; bB = 1.
E. bA> 0; bB = 1.


Answer: C

Business

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