company 1 |
company 2 |
company 3 |
company 4 |
market |
|
1/1/2020 |
10% |
10% |
10% |
10% |
10% |
12/1/2019 |
20% |
40% |
10% |
40% |
20% |
11/1/2019 |
30% |
30% |
50% |
30% |
30% |
10/1/2019 |
30% |
50% |
30% |
20% |
40% |
9/1/2019 |
40% |
40% |
20% |
10% |
50% |
a, What is the beta of the company 3? (hint: check slope)
b, Among company 1, 2, and 3, which one is the most risky one, based on beta?
beta is the slope of the security market line.
Beta is calculated using SLOPE function in Excel. Here, the "x"s are each company's returns (dependent variable) and the "y"s are the market returns (independent variable).
a]
beta of company 3 is 0.4
b]
Company 1 and 2 are the most risky, as they have the highest beta
Get Answers For Free
Most questions answered within 1 hours.