Extra Credit Beta

Extra Credit Beta - Extra Credit Calculating Beta...

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Extra Credit Calculating Beta Calculating beta. Download 5 years of monthly stock prices for your company. Yahoo finance is a good source for this – historical prices. When you have prices, you can then calculate returns using the equation (Month 2 return – Month 1 return)/Month 1 return. Then download 5 years of index prices for the S&P 500 (^gspc on yahoo finance) exactly matching the five years of returns for your company’s stock and calculate index returns. Note that when I say “calculate” I really mean have excel calculate – you only need to input the formula once and then drag it down your column of prices. Next, calculate beta by regressing your stock's returns on the returns to your index. The y variables are your company’s returns and the x variables are the index returns. Look up 3 other estimates of beta. (Sources like yahoo, google, msn money, Bloomberg, reuters and many more have this info.) Compare your calculated beta to the betas that you look up. In two or three sentences, state whether your calculated beta is
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This note was uploaded on 11/24/2011 for the course FINANCE 340 taught by Professor White during the Fall '11 term at Maryland.

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