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Air Canada stock has a standard deviation of 18%, while the market index standard deviation is...

Air Canada stock has a standard deviation of 18%, while the market index standard deviation is 8%. If the correlation between Air Canada and the market index is 0.45, what is the beta of Air Canada stock? (Show your calculations)

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Answer #1
formula for computing Beta = Correlation (Rs, Rm)*SDs/SDm
Correlation (Rs, Rm) = correlation between market return and stock return
SDs= Standard deviation of securities return
SDm= Standard deviation of market return
We have below-
Correlation (Rs,Rm) = 0.45
SDs 18%
SDm 8%
Beta = 0.45*18%/8%
Beta =          1.01
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