- CFA Exams
- CFA Exam: Level II 2021
- Study Session 9. Equity Valuation (1)
- Reading 25. Return Concepts
- Subject 3. The required return on equity - the CAPM approach
CFA Practice Question
The beta of Microsoft stock has been estimated as 1.5 by Merrill Lynch using regression analysis on a sample of historical returns. The Merrill Lynch adjusted beta of Microsoft stock would be
B. 1.0.
C. 1.33.
A. 1.5.
B. 1.0.
C. 1.33.
Correct Answer: C
(2/3) * sample beta + 1/3 = 1.33.
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