Posted by **Rony** on Wednesday, March 31, 2010 at 1:39pm.

Analyzing a Stock. The beta, B of a stock represents the relative risk of a stock compared with a market basket of stocks, such as Standard and poor's 500 Index of stocks. Beta is computed by finding the slope of the line of best fit between the rate of return of the stock and rate of return of the S&P 500. The rates of return are computed on a weekly basis.

a. Find the weekly closing price of your favorite stock and the S$P 500 for 20 weeks. One good source is on the Internet at

b. Compute the rate of return by computing the weekly percentage change in the closing price of your stock and the weekly percentage change in the S&P 500 using the following formula:

weekly % change= P2- P1/P1

where P1 is last week's price and P2 is this week's price.

c. Using a graphing utility, find the line of best fit, treating the weekly rate of return of the S&P 500 as the independent variable and the weekly rate of return of your stock as the dependent variable.

d. What is the beta of your stock?

e. Compare your result with that of the Value Linr Investment Survey found in your Library. What might account for any differences?

## Answer this Question

## Related Questions

- Finance - You would like to create a portfolio that is equally invested in a ...
- Corporate Finance - I am looking at a stock whose price is $45.00. I want a ...
- Finance - Suppose you are considering two investments, stock A and stock B. The ...
- calculating BETA - I am having the most trouble with this. Any help or direction...
- Finance - A portfolio consists of three stocks. The weight, expected rate of ...
- Business - Based on this financial info where a company's Beta Year = 2008, the...
- finance - 5. Consider the following stocks, all of which will pay a liquidating ...
- Finance - we have two stocks Stock A and Stock B, Both stocks have the same ...
- investment - Would you expect the required rate rate of returns for a U.S ...
- finance - A stock has a beta of 2.0. A security analyst who specializes in ...