The Hartman Company has a beta of 15 The New York Stock Exch

The Hartman Company has a beta of -1.5. The New York Stock Exchange is forecasted to finish the current year down 3%. What would you expect the change in Hartman’s stock price to be for the year? a. 1.0% b. -1.5% c. 3.0% d. 4.5% e. –4.5%

Solution

Beta represents a stock sensitivity to the market or stock exchangee Positive beta means stock have direct relation with the stock exchange and negative beta means stock has opposite relation. As in the given question beta of stock is negative and stock market is expected to fall by 3% the stock is expected to rise up by 1.5*3=4.5% up

Option d is correct.