Asked by
Daniela Almendarez
on Dec 02, 2024Verified
NM Mining Company has a standard deviation on its common stock of 60 percent and a correlation with market returns of 0.65. The market's standard deviation and expected return are 15 percent and 14 percent, respectively, and the risk-free rate of return is 8 percent. What is NM Mining's beta?
A) 3.5
B) 2.6
C) 1.0
D) 0.06
Correlation
A statistical measure that indicates the extent to which two or more variables fluctuate together. A positive correlation indicates that variables move in the same direction, while a negative correlation indicates they move in opposite directions.
Risk-Free Rate
The hypothesized return on an investment that carries no risk, often linked with government bonds.
- Gain an insight into the notion of beta and its importance in evaluating the market risk linked with a stock.
Verified Answer
EP
Learning Objectives
- Gain an insight into the notion of beta and its importance in evaluating the market risk linked with a stock.