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?

a. To find the weekly closing price of your favorite stock and the S&P 500 for 20 weeks, you can visit a financial website or use an online stock market data provider. There are several websites that provide historical stock prices, such as Yahoo Finance, Google Finance, or Bloomberg. Look for the historical price section, enter the ticker symbol of your favorite stock, and choose the desired date range (20 weeks). Repeat the same process for the S&P 500 index.

b. To compute the rate of return, use the formula:
Weekly % change = (P2 - P1) / P1

For each week, calculate the percentage change in the closing price of your stock and the S&P 500 using the above formula. Use the closing prices from the previous week (P1) and current week (P2). Repeat this calculation for all 20 weeks.

c. To find the line of best fit, you can use a graphing utility or software that provides regression analysis. Input the weekly rate of return of the S&P 500 as the independent variable (X-axis) and the weekly rate of return of your stock as the dependent variable (Y-axis). Plot the data points and use the built-in regression analysis feature to find the line of best fit.

d. The beta of your stock can be calculated by finding the slope of the line of best fit. The slope represents the beta value. If you used a graphing utility or software for regression analysis, it should provide the value of the slope, which is the beta of your stock.

e. After obtaining the beta of your stock, you can compare it with the beta reported by the Value Line Investment Survey. Any differences in the beta value could be due to different methodologies, time periods, or sample sizes used by the Value Line Investment Survey. It's important to note that beta values can vary depending on the data and calculation method used.

To analyze a stock and find its beta, you can follow these steps:

a. Find the weekly closing price of your favorite stock and the S&P 500 for 20 weeks. You can use a reliable source like financial websites, market data providers, or your broker's platform to obtain the historical closing prices for your stock and the S&P 500 index for the desired period.

b. Compute the rate of return for each week. To calculate the weekly percentage change, use the following formula:
Weekly % change = (P2 - P1) / P1
where P1 is the last week's closing price and P2 is this week's closing price. Repeat this calculation for both your stock and the S&P 500 index for each week in your 20-week period.

c. Use a graphing utility to plot the data. Set the weekly rate of return of the S&P 500 as the independent variable (x-axis) and the weekly rate of return of your stock as the dependent variable (y-axis). Plot the points on the graph.

d. Find the line of best fit. You can use regression analysis or built-in features of your graphing utility to find the line of best fit for the data points. This line represents the relationship between the rate of return of your stock and the rate of return of the S&P 500.

e. The slope of the line of best fit is the beta of your stock. The slope measures the relative risk of your stock compared to the overall market, as represented by the S&P 500. A beta of 1 indicates that the stock tends to move in line with the market. A beta greater than 1 indicates higher volatility, while a beta less than 1 indicates lower volatility.

f. Compare your calculated beta with published sources like the Value Line Investment Survey, which provides beta values for various stocks. Differences in beta values may occur due to variations in the sampling periods, calculation methodology, or differing assumptions about the market basket of stocks used in the analysis.

Remember, beta is an estimate based on historical data and may not accurately predict future performance. It is essential to consider other factors and conduct further research before making investment decisions.