Consider the following historical price data for Amazon and S&P500 over the last 10 periods: time...

 

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Consider the following historical price data for Amazon and S&P500 over the last 10 periods: time Amazon(price) S&P500(Price) 1 2759.82 2801.31 2801.83 2818.82 2840.35 2833.28 2850.13 2874.69 9 2901.52 10 2871.68 a. Find the return for each period for Amazon and S&P 500. b. Calculate the beta (3) of Amazon relative to the market. c. You observe the following yiled below: Overnight Federal Funds Rate:1.25% 2 Year AAA Corporate Bonds: 4% 2 Year Junk Company Bonds: 8% 2 3 4 5 6 7 1710.63 1813.03 1813.70 1817.27 1823.29 1886.30 1882.22 1905.39 2012.71 1952.07 8 Pick the one you think should consider as the necessary data you need in CAPM, use CAPM to calculate the expected return for Amazon. Consider the following historical price data for Amazon and S&P500 over the last 10 periods: time Amazon(price) S&P500(Price) 1 2759.82 2801.31 2801.83 2818.82 2840.35 2833.28 2850.13 2874.69 9 2901.52 10 2871.68 a. Find the return for each period for Amazon and S&P 500. b. Calculate the beta (3) of Amazon relative to the market. c. You observe the following yiled below: Overnight Federal Funds Rate:1.25% 2 Year AAA Corporate Bonds: 4% 2 Year Junk Company Bonds: 8% 2 3 4 5 6 7 1710.63 1813.03 1813.70 1817.27 1823.29 1886.30 1882.22 1905.39 2012.71 1952.07 8 Pick the one you think should consider as the necessary data you need in CAPM, use CAPM to calculate the expected return for Amazon.

Answer rating: 100% (QA)

Solution a The returns for each period for Amazon and SP 500 are Amazon Period 1 0035 171063 171416 ... View the full answer