1. You have developed data with (1) the annual percentage returns of the market for the past five years and (2) similar annual percentage returns information on Stocks A and B. Which of the possible answers best describes the historical beta for A and B?

Years Market % returns Stock A % returns Stock B % returns

2016 3% 1% 5%

2017 5% 3% 5%

2018 1% 0% 4.5%

2019 -8% -5% 4%

2020 6% 4% 5%

1. beta_A > 0; beta_B < 1.
2. beta_A > 1; beta_B < 1.
3. beta_A < 0; beta_B = 0.
4. beta_A > 1; beta_B < 0.
5. beta_A < 1; beta_B > 1.
6. None of the above (state your answer)