The following table lists returns on the market portfolio and on Microsoft, each year from 1989 to

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The following table lists returns on the market portfolio and on Microsoft, each year from 1989 to 1998.

a. Estimate the covariance in returns between Microsoft and the market portfolio.
b. Estimate the variances in returns on both investments.
c. Estimate the beta for Microsoft.

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Applied Corporate Finance

ISBN: 978-1118808931

4th edition

Authors: Aswath Damodaran

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Question Posted: Apr 15, 2015 09:03 AM

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The following table lists returns on the market portfolio and on Microsoft, each year from 1989 to

Question:

Year Microsoft (%) Market portfolio (%) 80.95 -47.37 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 31.49 31 132.44 32.02 25.37 28.57 0.00 11.67 36.19 30.57 7.58 10.36 2.55 37.57 22.68 33.10 28.32

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