Answer: 0.81

The expected return on the stock is given by the Capital Asset Pricing Model (CAPM) formula: $$r_f + \beta(r_m - r_f)$$ Where: - $r_f$ = risk-free rate = 2.1% - $r_m$ = market return = 17% - Stock return = 14.2% Substituting the values: $$14.2\% = 2.1\% + \beta(17\% - 2.1\%)$$ $$14.2\% = 2.1\% + \beta(14.9\%)$$ $$14.2\% - 2.1\% = \beta(14.9\%)$$ $$12.1\% = \beta(14.9\%)$$ $$\beta = \frac{12.1\%}{14.9\%} = 0.81$$ The beta of 0.81 indicates that the stock is less volatile than the market, as a beta less than 1 suggests the stock moves less than the market.

Author: Tanishq Prabhu