OA Graphical derivation of beta A firm wishes to estimate graphically the betas for two assets, A and B. It has gathered the return data shown in the following table for the market portfolio and for both assets over the last 10 years, 2009-2018: a. Which of the following graphs represents the graphical derivation of beta for assets A and B? b. Use the characteristic lines from part a to estimate the betas for assets A and B. c. Use the betas found in part b to comment on the relative risks of assets A and B. a. Which of the following graphs represents the graphical derivation of beta for assets A and B? (Select the best answer below.) Asset Return (% Beta Derivation 20 15 20-150 540 15 20 -10- --15- Asset A Asset B 20 OC. Market Retum (%) Beta Derivation 20- 15 Asset Return (%) 10- 15 20 5 -10 -15 G -20 Asset A Asset B Market Return (%) b. Using the characteristic lines from part a, which of the following pairs of data represents the beta estimates for assets A and B? (Select the best answer below.) OA. (-1.089,-0.719) OB. (-1.089,0.719) OC. (1.089,0.719) OD. (1.089,-0.719) c. Using the belas found in part b, which asset is more risky? (Select the best answer below.) OA. Asset A B. Asset B COD. OB. Beta Derivation 20 15- Asset Return (%) Asset Return (%) 10- 54 -20-15 5 5 10 15 20 5 -10- -15 Asset A Asset B -20 Market Return (%) Beta Derivation 20 15- 10- -20-15 10 S 5 Q 15 20 -5 -10- -15- Asset A -Asset B -20- Market Return (%)
OA Graphical derivation of beta A firm wishes to estimate graphically the betas for two assets, A and B. It has gathered the return data shown in the following table for the market portfolio and for both assets over the last 10 years, 2009-2018: a. Which of the following graphs represents the graphical derivation of beta for assets A and B? b. Use the characteristic lines from part a to estimate the betas for assets A and B. c. Use the betas found in part b to comment on the relative risks of assets A and B. a. Which of the following graphs represents the graphical derivation of beta for assets A and B? (Select the best answer below.) Asset Return (% Beta Derivation 20 15 20-150 540 15 20 -10- --15- Asset A Asset B 20 OC. Market Retum (%) Beta Derivation 20- 15 Asset Return (%) 10- 15 20 5 -10 -15 G -20 Asset A Asset B Market Return (%) b. Using the characteristic lines from part a, which of the following pairs of data represents the beta estimates for assets A and B? (Select the best answer below.) OA. (-1.089,-0.719) OB. (-1.089,0.719) OC. (1.089,0.719) OD. (1.089,-0.719) c. Using the belas found in part b, which asset is more risky? (Select the best answer below.) OA. Asset A B. Asset B COD. OB. Beta Derivation 20 15- Asset Return (%) Asset Return (%) 10- 54 -20-15 5 5 10 15 20 5 -10- -15 Asset A Asset B -20 Market Return (%) Beta Derivation 20 15- 10- -20-15 10 S 5 Q 15 20 -5 -10- -15- Asset A -Asset B -20- Market Return (%)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:OA
Graphical derivation of beta A firm wishes to estimate graphically the betas for two assets, A and B. It has gathered the return data shown in the following table for the market portfolio and for both assets over the last 10 years, 2009-2018:
a. Which of the following graphs represents the graphical derivation of beta for assets A and B?
b. Use the characteristic lines from part a to estimate the betas for assets A and B.
c. Use the betas found in part b to comment on the relative risks of assets A and B.
a. Which of the following graphs represents the graphical derivation of beta for assets A and B? (Select the best answer below.)
Asset Return (%
Beta Derivation
20
15
20-150
540 15 20
-10-
--15-
Asset A
Asset B
20
OC.
Market Retum (%)
Beta Derivation
20-
15
Asset Return (%)
10-
15 20
5
-10
-15
G
-20
Asset A
Asset B
Market Return (%)
b. Using the characteristic lines from part a, which of the following pairs of data represents the beta estimates for assets A and B? (Select the best answer below.)
OA. (-1.089,-0.719)
OB. (-1.089,0.719)
OC. (1.089,0.719)
OD. (1.089,-0.719)
c. Using the belas found in part b, which asset is more risky? (Select the best answer below.)
OA. Asset A
B. Asset B
COD.
OB.
Beta Derivation
20
15-
Asset Return (%)
Asset Return (%)
10-
54
-20-15
5
5
10 15 20
5
-10-
-15
Asset A
Asset B
-20
Market Return (%)
Beta Derivation
20
15-
10-
-20-15 10 S
5
Q 15 20
-5
-10-
-15-
Asset A
-Asset B
-20-
Market Return (%)
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