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You Are Given the Following Returns on "The Market" and Stock

Question 31

Multiple Choice

You are given the following returns on "the market" and Stock F during the last three years. We could calculate beta using data for Years 1 and 2 and then, after Year 3, calculate a new beta for Years 2 and 3. How different are those two betas, i.e., what's the value of beta 2 - beta 1? (Hint: You can find betas using the Rise-Over-Run method, or using your calculator's regression function.)  Year  Market  Stock F 16.10%6.50%212.90%−3.70%316.20%21.71%\begin{array}{lr}\text { Year } &\text { Market } & \text { Stock F } \\1&6.10 \%& 6.50 \% \\2&12.90 \% & -3.70 \% \\3&16.20 \% & 21.71 \%\end{array}


A) 7.89
B) 8.30
C) 8.74
D) 9.20
E) 9.66

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