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Calculate Beta for Apple and Microsoft, using a characteristic line. Display the data points on a...

  1. Calculate Beta for Apple and Microsoft, using a characteristic line. Display the data points on a graph and display the characteristic line.
    Year Microsoft Apple Market
    Jan 2010 - Dec 2010 1 -0.34% 3.85% 14.93%
    Jan 2011 - Dec 2011 2 -0.37% 2.09% 2.06%
    Jan 2012 - Dec 2012 3 0.40% 2.87% 15.84%
    Jan 2013 - Dec 2013 4 2.81% 0.38% 32.21%
    Jan 2014 - Dec 2014 5 1.91% 3.05% 13.53%
    Jan 2015 - Dec 2015 6 1.75% -0.45% 1.34%
    Jan 2016 - Dec 2016 7 1.37% 1.24% 11.80%
    Jan 2017 - Dec 2017 8 2.72% 3.41% 21.69%
    Jan 2018 - Dec 2018 9 1.41% -0.33% -4.45%
    Jan 2019 - Dec 2019 10 4.06% 5.89% 31.29%
    Average Return 1.57% 2.20% 14.02%
    Std Deviation 1.42% 2.02% 12.21%
    Correlation with the market 0.61 0.57 1.00
    Beta 0.07 0.09 1.00

    Beta Calculation
    Run a regression line of past returns on Stock I versus returns on the market. The regression line is the characteristic line.
    Year rM ri
    1
    2
    3
    4
    5
    6
    7
    8
    9
    10

Solutions

Expert Solution

Year Microsoft Apple Market Calculation Of Beta
Jan 2010- Dec 2010 1 -0.34% 3.85% 14.93%
Jan 2011-Dec 2011 2 -0.37% 2.09% 2.06% Beta of Microsoft Beta of Apple
Jan 2012-Dec 2012 3 0.40% 2.87% 15.84% 0.070527 0.093861
Jan 2013-Dec 2013 4 2.81% 0.38% 32.21% 0.071995 0.092698
Jan 2014-Dec 2014 5 1.91% 3.05% 13.53% 0.058687 0.104851
Jan 2015-Dec 2015 6 1.75% -0.45% 1.34% 0.594003 0.562892
Jan 2016-Dec 2016 7 1.37% 1.24% 11.80% 0.580158 0.546955
Jan 2017-Dec 2017 8 2.72% 3.41% 21.69% 0.577716 0.545479
Jan 2018-Dec 2018 9 1.41% -0.33% -4.45% 0.58929 0.54952
Jan 2019-Dec 2019 10 4.06% 5.89% 31.29% 0.585988 0.54518
Average Return 1.57% 2.20% 14.02% 0.582432 0.54192
std Deviation 1.42% 2.02% 12.21% 0.618096 0.561246
Correlation with the market 0.61 0.57 1
Beta 0.07 0.09 0.01
= Correlation *(Standard Deviation of stock)
Standard deviation of Market 0.0709419 0.0942998
Beta is the slope of the regression line . As seen in the graph
Apple y = 0.0939x + 0.0088 Beta = .0939
Microsoft y = 0.0705x + 0.0058 Beta = .0705

jeff jeffy answered 2 years ago
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