What will a beta book compute as the “adjusted beta” of this stock?What would be your...

What will a beta book compute as the “adjusted beta” of this stock?What would be your predicted beta for next year?

A stock recently has been estimated to have a beta of 1.40:

a. What will a beta book compute as the “adjusted beta” of this stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Adjusted beta

?

b. Suppose that you estimate the following regression describing the evolution of beta over time:

β_t = 0.4 + 0.6β_t_–1

What would be your predicted beta for next year? (Do not round intermediate calculations. Round your answer to 3 decimal places.)

Predicted beta

?

Expert Solution

jeff jeffy answered 2 days ago

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