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Thomson One Stock Analysis: does stock beta predict change in stock price

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Using the Thomson One site or www.yahoofinance.com site, choose three dividend-paying firms in three different industries. Determine the beta for each of these firms. Discuss the differences you observe. Next, find each stock's percentage stock price change for the past year. Also, find the percentage change in the S&P 500 index (i.e., the proxy for the market index) for the past year. Using these two pieces of information, does the beta of each stock predict their change in price? Why or why not?

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Solution Summary

The expert examines if the stock beta predicts change in the stock price for Thomson One Stock Analysis.

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ANSWERS

Microsoft Corporation (NasdaqGS: MSFT)
Sector: Technology
Industry: Application Software
Beta: 0.98
Stock's price percentage change: ($28.18 - $17.42) / $17.42 = 61.77%

Wal-Mart Stores (NYSE: WMT)
Sector: Services
Industry: Discount, Variety Stores
Beta: 0.25
Stock's price percentage change: ($53.43 - $45.58) / $45.58 = 17.22%

JP Morgan Chase Company (NYSE: JPM)
Sector: ...

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