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returns of the entire market over the same period of time as a way of measuring its market risk. While
this is not a perfect measurement, it at least provides an estimate of the sensitivity of that particular
stock's returns as compared to the returns of the market as a whole. But what if we are evaluating the
market risk of a new product? We can't look at how that new product has affected the company's stock
return! So what do we do? 1 To perform this analysis, we use Microsoft Excel’s Random Number Generator in the Data Analysis
program to perform the simulation given our specified distributions of all the variable factors.
2 For an explanation of how to use Microsoft Excel® in simulation, go to http://office.microsoft.com/enus/assistance/HA011118931033.aspx Capital budgeting & risk, a reading prepared by Pamela Peterson Drake 8 Though we can't look at a project's returns and see how they relate to the returns on the market as a
whole, we can do the next best thing: estim...
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- Spring '07