1. Lowes rises by more than 1% when the market rises by exactly 1%. From this in
ID: 2735575 • Letter: 1
Question
1. Lowes rises by more than 1% when the market rises by exactly 1%. From this information, which of the following is TRUE about Lowe’s beta?
Greater than one
Less than zero
Between zero and one
Less than zero
Less than one
2. Currencies – U.S. dollar foreign-exchange rates. May 5, 2011
Country/currency………..in US$..............per US$
British Pound……………….1.5347…………….0.6516
Norwegian Kroner……….0.1690……………..5.9173
Thai Baht……………………..0.0310……………..32.250
Jackson has 19,000 of Thai currency in his pocket and he desires British pounds. Which amount comes closest to the amount of Pounds he can exchange them for?
904 pounds
384 Pounds
364 Pounds
297 Pounds
399 Pounds
a.Greater than one
b.Less than zero
c.Between zero and one
d.Less than zero
e.Less than one
Explanation / Answer
1).
Observe that beta measures the volatility of a particular stock.
Volatility of a stock is defined as the degree of the change in the stocks return.
In other words beta measures the responsiveness of the change in the stock return.
Here, the scenario is that the stock rises by more than 1 % when the market rises by 1 %.
Therefore it is observed that the degree of responsiveness is more. Hence, the beta is greater than 1.
Therefore, the correct option is part a).
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