Suppose the market portfolio is equally likely to increase by 26 % or decrease by 9%.
a. Calculate the beta of a firm that goes up on average by 20% when the market goes up and goes down by 15% when the market goes down.
b. Calculate the beta of a firm that goes up on average by 16% when the market goes down and goes down by 20% when the market goes up.
c. Calculate the beta of a firm that is expected to go up? 4% independently of the market.