Below is nine months return data for Walgreens and the S&P 500. a. Estimate the intercept (alpha)

Question:

Below is nine months’ return data for Walgreens and the S&P 500.

a. Estimate the intercept (alpha) and beta for Walgreens stock using spreadsheet functions.

b. Interpret what the slope estimate means to a stock analyst.

c. Compute the R-squared of the regression using Excel’s RSQ function. What does the R-squared tell us about the relationship between Walgreens’ returns and those of the market?

Month Walgreens Return S&P500 Return 1 2.0% 7.5% -5.9% 1.8% 2 0.2% -8.2% 4 2.0% -6.4% -1.1% -2.2% -2.5% 6. -14.3% -6.0%

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Introduction to Finance Markets, Investments and Financial Management

ISBN: 978-1119398288

16th edition

Authors: Ronald W. Melicher, Edgar A. Norton

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Question Posted: Jun 12, 2019 10:42 AM

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Below is nine months return data for Walgreens and the S&P 500. a. Estimate the intercept (alpha)

Question:

Month Walgreens Return S&P500 Return 1 2.0% 7.5% -5.9% 1.8% 2 0.2% -8.2% 4 2.0% -6.4% -1.1% -2.2% -2.5% 6. -14.3% -6.0% 0.5% 8. 4.9% 7.7% 9. -7.9% -6.4%

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a Alpha 2754 Beta 0340 R squared 0107 Interpret what the slope ...View the full answer

Introduction to Finance Markets, Investments and Financial Management

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