Find all School-related info fast with the new School-Specific MBA Forum

 It is currently 29 Jun 2016, 11:58

### GMAT Club Daily Prep

#### Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

# Events & Promotions

###### Events & Promotions in June
Open Detailed Calendar

# ) One year from today, the market will either be strong or

Author Message
Current Student
Joined: 29 Jan 2005
Posts: 5239
Followers: 23

Kudos [?]: 293 [0], given: 0

) One year from today, the market will either be strong or [#permalink]

### Show Tags

01 Feb 2008, 23:11
This topic is locked. If you want to discuss this question please re-post it in the respective forum.

1.) One year from today, the market will either be strong or weak. The probability of each outcome, along with the return on the market and the return on Management Industries stock, are summarized in the following table.

State Prob. rmkt rmgmt
Strong 0.5 0.15 0.30
Weak 0.5 0.02 -0.05

What is the beta of Management Industries stock?
CEO
Joined: 21 Jan 2007
Posts: 2756
Location: New York City
Followers: 9

Kudos [?]: 649 [0], given: 4

Re: Real life MBA math question [#permalink]

### Show Tags

02 Feb 2008, 05:33
isnt this a simple weighted avg of just the stock?
_________________

You tried your best and you failed miserably. The lesson is 'never try'. -Homer Simpson

SVP
Joined: 29 Aug 2007
Posts: 2492
Followers: 65

Kudos [?]: 669 [0], given: 19

Re: Real life MBA math question [#permalink]

### Show Tags

02 Feb 2008, 12:59
GMATT73 wrote:
1.) One year from today, the market will either be strong or weak. The probability of each outcome, along with the return on the market and the return on Management Industries stock, are summarized in the following table.

State Prob. rmkt rmgmt
Strong 0.5 0.15 0.30
Weak 0.5 0.02 -0.05

What is the beta of Management Industries stock?

Beta of the stock = cov (MI, M)/var(M) = 2.692308

this could be a real course problem so it won't be good to discuss it in the public forum like this one.

if you need something more in detail, send pm.
_________________
SVP
Joined: 28 Dec 2005
Posts: 1575
Followers: 3

Kudos [?]: 122 [0], given: 2

Re: Real life MBA math question [#permalink]

### Show Tags

02 Feb 2008, 15:47
i was gonna ask .... whats beta ???
SVP
Joined: 29 Aug 2007
Posts: 2492
Followers: 65

Kudos [?]: 669 [0], given: 19

Re: Real life MBA math question [#permalink]

### Show Tags

04 Feb 2008, 13:09
pmenon wrote:
i was gonna ask .... whats beta ???

Beta has multiple meanings but in finance its a measure of systematic risk of a stock's return. For more about Beta, refer to the following links:

http://en.wikipedia.org/wiki/Beta
http://en.wikipedia.org/wiki/Beta_coefficient
http://www.chicagogsb.edu/faculty/bio.a ... _id=159486
http://www-groups.dcs.st-and.ac.uk/~his ... scher.html
http://www.people.hbs.edu/mjensen/
http://www.stanford.edu/~wfsharpe/
http://www.wharton.upenn.edu/faculty/blume.html
_________________
Director
Joined: 01 Jan 2008
Posts: 629
Followers: 5

Kudos [?]: 162 [0], given: 1

Re: Real life MBA math question [#permalink]

### Show Tags

04 Feb 2008, 13:40
pmenon wrote:
i was gonna ask .... whats beta ???

According to CAPM

Ret(Stock) = RFR + beta*(Ret(market) - RFR), where RFR - risk free rate.

Re: Real life MBA math question   [#permalink] 04 Feb 2008, 13:40
Display posts from previous: Sort by