How to calculate the stock beta?



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How to solve this question:
The total risk of Stock Y is 0.2, the total risk of the index is .18. The covariance of returns between the stock and index is .27, what is the stock’s beta?

1 Answer(s)


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Stock beta= Covariance/ Variance of index.
=(.27/.18*.18)
= answer.

Note that the Covariance value should be .027. And answer will come as 0.83333
Also total risk means standard deviation.

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