The data below records the rates of return for the SP stock index and stocks for two companies, Stat


Question: The data below records the rates of return for the S&P stock index and stocks for two companies, StatFab and RobCo. One measure of the volatility (or riskiness) of a stock is how dramatically it varies as the S&P varies – that is, a stocks “beta.” (See http://en.wikipedia.org/wiki/Beta_finance.) One definition of a stock’s beta is the slope of the line regressing the rates of return of the stock vs. the S&P. Which of these two securities is more volatile according to this measure? (Again, you can copy this data into Excel.)

Period S&P StatFab RobCo
1 0.11 0.10 0.13
2 0.12 0.10 0.15
3 0.10 0.09 0.13
4 0.05 0.05 0.05
5 0.11 0.11 0.13
6 0.12 0.12 0.14
7 0.07 0.08 0.04
8 0.13 0.11 0.14
9 0.07 0.07 0.09
10 0.17 0.13 0.20
11 0.09 0.09 0.11
12 0.12 0.10 0.14
13 0.04 0.06 0.02
14 0.13 0.10 0.17
15 0.11 0.09 0.14
16 0.19 0.13 0.19
17 0.08 0.08 0.10
18 0.14 0.12 0.17
19 0.15 0.15 0.16
20 0.06 0.09 0.07
21 0.16 0.14 0.18
22 0.15 0.11 0.16
23 0.09 0.08 0.12
24 0.10 0.10 0.12
Price: $2.99
Solution: The downloadable solution consists of 3 pages
Deliverables: Word Document

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