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A stock has a standard deviation of 24.4 percent and a covariance with the market of...

A stock has a standard deviation of 24.4 percent and a covariance with the market of 0.03. The market has a standard deviation of 12.2 percent. What is the beta of this stock?

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Answer #1
Beta is the systematic risk of a stock. It measures how the stock would fluctuate in comparison to the market
Formula to calculate beta of stock
Beta of stock = (Covariance of stock and market return/Variance of market)
We have been given standard deviation of market from which we would calculate the variance
Variance = (Standard deviation)^2
Variance of market = (0.122^2)
Variance of market = 0.014884
Beta of stock = [0.03/0.014884]
Beta of stock 2.02
Beta of the stock is 2.02
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