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So i have this question and I wanted to be sure that my calculations were correct.

The standard deviations of the market returns is $0.2(20%)$ and the covariance between the return on the market portfolio and Amazon is $0.05$. Calculate the beta of Amazon.

So i know that Beta= (covariance)/ variance, where

  • Covariance=Measure of a stock’s return relative to that of the market,
  • Variance=Measure of how the market moves relative to its mean.

Then am I correct by squaring the Standard deviation of the market returns ($0.2$ times $0.2$) to get $0.04$ as the variance and then the Beta would be $0.05/0.04$?

Is my answer right? ​

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