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Financial analysts have estimated the returns on shares of Drucker Corporation and the overall market portfolio...

Financial analysts have estimated the returns on shares of Drucker Corporation and the overall market portfolio under various economic conditions as follows. The return for Drucker in the following three economic states of nature are forecasted to be: -16% in recession, +11% in moderate growth, and +35% in a boom. Estimates for the market as a whole in the same economic states are -12% in recession, +10% in moderate growth, and +23% in boom. The analyst considers each state to be equally likely. Using these data, compute the beta of Drucker Corporation's stock.


Place your answer as a number with at least three decimal places.

*please show how to get anwser

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Answer #1

beta of stock = Covariance(stock,market)/variance(market)

use excel formuale for covariance which is Covariance.s and variance formuale which is var.s() to get the numerator and denominator

the answer is 1.433

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