The beta of a stock has been estimated as 0.85 using regression analysis on a sample of historical returns. A commonly-used adjustment technique would provide an adjusted beta of

A. 1.01.
B. 0.95.
C. 1.13.
D. 0.90.


D. 0.90.

Adjusted beta = 2/3 sample beta + 1/3(1); = 2/3(0.85) + 1/3 = 0.90.

Business

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Business