Hello,

This was a recent exam question that I did not get correct. An explanation would be very helpful since my final exam is coming up in a week. Explanations without Excel are best since I am not permitted to use Excel for the exam. Thank you!

You Answered You have the following data on (1] the average annual retums of the market for the past 5 years and (2} similar information on Stocks A and B. Which of the possible answers best describes the historical betas for A and B? Year Market Stock A Stock B 2013 0.03 -0.16 0.05 2014 -0.05 0.20 0.05 2015 0.01 -0.03 0.05 2016 -0. 10 0.25 0.05 2013'r 0.06 -0.18 0.05 ISA 3 0: I33 = 1 ISA = 0: I38 = -1 M