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GMATT73
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) One year from today, the market will either be strong or 01 Feb 2008, 23:11
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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?



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bmwhype2
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) One year from today, the market will either be strong or 02 Feb 2008, 05:33
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isnt this a simple weighted avg of just the stock?
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GMAT TIGER
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) One year from today, the market will either be strong or 02 Feb 2008, 12:59
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GMATT73
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?
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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.
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) One year from today, the market will either be strong or 02 Feb 2008, 15:47
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i was gonna ask .... whats beta ??? :???
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) One year from today, the market will either be strong or 04 Feb 2008, 13:09
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pmenon
i was gonna ask .... whats beta ??? :???
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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:

https://en.wikipedia.org/wiki/Beta
https://en.wikipedia.org/wiki/Beta_coefficient
https://www.chicagogsb.edu/faculty/bio.a ... _id=159486
https://www-groups.dcs.st-and.ac.uk/~his ... scher.html
https://www.people.hbs.edu/mjensen/
https://www.stanford.edu/~wfsharpe/
https://www.wharton.upenn.edu/faculty/blume.html
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maratikus
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) One year from today, the market will either be strong or 04 Feb 2008, 13:40
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pmenon
i was gonna ask .... whats beta ??? :???
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According to CAPM

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

beta reflects sensitivity of the stock return to the market return.



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