Suppose the following equation best describes the evolution of β over time:β_t = 0.36 + 0.85β_t ₋₁.If a stock had a β of 0.6 last year, you would forecast the β to be _______ in the coming year.

A) 0.45
B) 0.60
C) 0.87
D) 0.75

Question

Melissa Aliotta · Accepted Answer

Final Answer : C, Explanation :  The equation provided suggests that the evolution of β over time is dependent on its previous value. Given a β of 0.6 last year, we substitute this value into the equation: 0.36 + 0.85(0.6) = 0.36 + 0.51 = 0.87. Therefore, the forecasted β for the coming year is 0.87.

Suppose the following equation best describes the evolution of β over time:β_t = 0.36 + 0.85β_t ₋₁.If a stock had a β of 0.6 last year, you would forecast the β to be _______ in the coming year.

A) 0.45
B) 0.60
C) 0.87
D) 0.75

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Learning Objectives

Related questions

Suppose the following equation best describes the evolution of β over time:βt = 0.36 + 0.85βt − 1.If a stock had a β of 0.6 last year, you would forecast the β to be _______ in the coming year.A) 0.45B) 0.60C) 0.87D) 0.75

Definitions

Learning Objectives

Learning Objectives

Related questions

Suppose the following equation best describes the evolution of β over time:β_t = 0.36 + 0.85β_t ₋₁.If a stock had a β of 0.6 last year, you would forecast the β to be _______ in the coming year.

A) 0.45
B) 0.60
C) 0.87
D) 0.75