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Daniela Almendarez
on Dec 02, 2024

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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.
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Estela PonceDec 02, 2024
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