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    period company return market index return
    1 9 10
    2 10 11
    3 11 11
    4 12 12

    Find for the company and the market index (show the calculations):
    a. average return
    b. variance
    c. standard deviation
    d. beta
    e. the intercept and the slope of the characteristic line.

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    Solution Preview

    The average return is found by summing the values and dividing by the number of values, N.
    company return: 42/4 =10.5
    market index return: 44/4 = 11

    The variance is found by taking the the sum of the squares of the differences between the mean and each value and dividing by N-1.

    The variance for the company's returns is therefore:
    (9-10.5)^2+ (10-10.5)^2+(11-10.5)^2+(12-10.5)^2 / ...

    Solution Summary

    Given data, finding the average return, variance, standard deviation and beta.