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A stock recently has been estimated to have a beta of 1.20: a. What will a beta book compute as the adjusted beta of this s

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Answer #1

a. Adjusted beta = 2/3* raw beta + 1/3*1

adjusted beta = 2/3 * 1.2 + 1/3 = 1.13

b. predicted beta = 0.2 + 0.8*1.2

predicted beta = 1.160

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