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4-9 A stock recently has been estimated to have a beta of 1.34: a. What will a beta book compute as the adjusted beta of

4-9

A stock recently has been estimated to have a beta of 1.34:

a. What will a beta book compute as the adjusted beta of this stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

b. Suppose that you estimate the following regression describing the evolution of beta over time:

_t = 0.8 + 0.2_t₁

What would be your predicted beta for next year? (Do not round intermediate calculations. Round your answer to 3 decimal places.)

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