Consider the Following Average Annual Returns for Stocks a and B

Consider the following average annual returns for Stocks A and B and the Market.Which of the possible answers best describes the historical betas for A and B?
$\begin{array}{cc}\text { \underline{Years }} &\text { \underline{Market} } & \text { \underline{Stack A }} & \text { \underline{Stack B} } \\1&0.03& 0.16&0.05\\2 & -0.05&0.20 &0.05 \\3 & 0.01&0.18 & 0.05\\4 & -0.10 &0.25 &0.05\\5 & 006& 0.14&0.05\end{array}$

A) b_A > +1; b_B = 0.
B) b_A = 0; b_B = -1.
C) b_A < 0; b_B = 0.
D) b_A < -1; b_B = 1.
E) b_A > 0; b_B = 1.

Correct Answer:

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