Risk and Return: Use spreadsheet or a calculator with a linear regression to determine Stock X's beta coefficient
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You are given the following set of data:
Year NYSE Stock X
1 -26.5% -14.0%
2 37.2% 23.0 %
3 23.8% 17.5%
4 -7.2% 2.0%
5 6.6% 8.1%
6 20.5% 19.4%
7 30.6% 18.2%
A) Use spreadsheet or a calculator with a linear regression to determine Stock X's beta coefficient
B) Determine the arithmetic average rates of return for Stock X and the NYSE over the period given. Calculate the standard deviations of returns for both Stock X and the NYSE
C) Assuming (1) that the situation during Years 1 to 7 is expected to hold true in the future and (2) that Stock X is in equilibrium, what is the risk-free rate?
D) Plot the Security Market Line.
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Solution Summary
The expert uses a spreadsheet or a calculator for risks and returns.
Education
- BA, Ain Shams University, Cairo Egypt
- MBA, California State University, Sacramento
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