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    MissItaliana86's Avatar
    MissItaliana86 Posts: 2, Reputation: 1
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    #1

    Jun 9, 2009, 04:29 PM
    How do I find a stock's beta?
    I'm sort of at a loss, my book doesn't seem to explain it well.

    Here is the question:

    The standard deviation of stock returns for stock A is 40%. The standard deviation of the market return is 20%. If the correlation between Stock A and the market is 0.70, what is Stock A's beta?

    Any help is appreciated! :)
    MissItaliana86's Avatar
    MissItaliana86 Posts: 2, Reputation: 1
    New Member
    		  
    #2

    Jun 9, 2009, 08:23 PM

    I think the answer is:

    beta coefficient for the I-th stock= (the standard deviation of the I-th stock's return/the standard deviation of the markets return) (the correlation between the I-th stock's return and the return on the market).

    = .40/.20 (.70)= 2 (.70)= 1.4 beta

    could someone let me know if I'm off? Ty in advance :)
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