For each additional 1% change in market return, the return on a stock having a beta of 2.2 changes, on average, by:

1.00%.

0.55%.

2.20%.

1.10%.

To solve this problem, we need to understand the relationship between a stock's return and the market return through **beta**. The beta of a stock measures the sensitivity of the stock's return to the overall market return. A stock with a beta of 2.2 means that for every 1% change in the market return, the stock's return changes by 2.2 times that amount, on average.

### Calculation:
- **Market return change**: 1%
- **Stock beta**: 2.2

Therefore, for each 1% change in the market return, the stock's return changes by \( 1\% \times 2.2 = 2.20\% \).

The correct answer is:

**2.20%.**

Would you like further details or have any other questions?

Here are 5 related questions to consider:
1. What does a beta value of less than 1 indicate about a stock's volatility compared to the market?
2. How is beta calculated for a stock?
3. How would a negative beta value affect a stock's return in relation to market movements?
4. What is the significance of a beta of 1 for a stock?
5. How does beta factor into the Capital Asset Pricing Model (CAPM)?

**Tip:** Beta helps investors understand a stock's risk relative to the market, but it does not account for company-specific risks. Always consider both market and individual factors when assessing investments.

Explore how changes in market return affect a stock's return based on its beta value of 2.2. Understand the calculation process and implications. Suitable for college-level students and finance enthusiasts.

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