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.