Currently Delta's market capitalization is (approximately) $21.1 billion and beta is 1.3. What does this mean?...

Currently Delta's market capitalization is (approximately) $21.1 billion and beta is 1.3. What does this mean?

A. The total value of Delta's stock is valued at $21.1 billion and the stock price typically changes by (approximately) a smaller percentage as the S&P 500 index.
B. The total value of Delta's stock is valued at $21.1 billion and the stock price typically changes by (approximately) a smaller percentage as the Dow Jones Industrial Average index.
C. The total value of Delta Air is valued at $21.1 billion and the stock price typically changes by (approximately) a larger percentage as the S&P 500 index.
D. The total value of Delta Air is valued at $21.1 billion and the stock price typically changes by (approximately) a larger percentage as the Dow Jones Industrial Average index.
E. None of the above.

Solutions

Expert Solution

Beta basically(in simple words) is the movement of stock with respect to market.

It measures the volatility of the stock in compare to the market.

Here, Beta is 1.3 which means that stock moves more than the market. This means it changes by a larger percentage by market.

For Example if the market rises by 1% stock rise by 1.3% or vice versa .

Market Cap measures the total value of stocks in the market. Here it is $ 21.1 billion.

Since we do not have information about the market, therefore, it can be included in any index i.e. Dow Jones or S&P 500 .

Thus, both options c) and d) are correct.

Rahul Sunny answered 2 years ago

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