Question: Can you please show me the step by step break-down, my professor approached it by jumping all over the place and I'd like to see
Can you please show me the step by step break-down, my professor approached it by jumping all over the place and I'd like to see the best chronology of how to answer the problem. Thanks!
Monthly return data are presented below for each of three stocks and the S&P index (corrected for dividends) for a 12-month period.
Calculate the following quantities:
A. alpha for each stock
B. beta for each stock
C. the standard deviation of the residuals from each regression
D. the correlation coefficient between each security and the market
E. the average return on the market
F. the variance of the market
| Month | A | B | C | S&P 500 |
|---|---|---|---|---|
| 1 | 12.05% | 25.20% | 31.67% | 12.27% |
| 2 | 15.27% | 2.86% | 15.82% | 5.99% |
| 3 | -4.12% | 5.45% | 10.58% | 2.41% |
| 4 | 1.57% | 4.56% | -14.43% | 4.48% |
| 5 | 3.16% | 3.72% | 31.98% | 4.41% |
| 6 | -2.79% | 10.79% | -0.72% | 4.43% |
| 7 | -8.97% | 5.38% | -19.64% | -6.77% |
| 8 | -1.18% | -2.97% | -10.00% | -2.77% |
| 9 | 1.07% | 1.52% | -11.51% | 3.46% |
| 10 | 12.75% | 10.75% | 5.63% | 6.16% |
| 11 12 | 7.48% -0.94% | 3.79% 1.32% | -4.67% 7.94% | 2.47% -1.15% |
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