Nike: estimate beta usingregression method 3 years of monthly data; S&P 500 (SPY)

-Y-axis = your stock return and X-axis = SPY return

-Compare estimate of beta with Yahoo

-Estimate average beta (Average of Nike estimates and yahoo beta), using this average beta, estimate the required rate of return of your chosen stock (CAPM).

-What is the estimated alpha of your stock? What does this mean?

-Estimate the beta of your stock using: b_i= (_i/_M)*_iM

-Where_iand_Mare standard deviation of stock i(Nike stock) andstandard deviation of the Market(Standard deviation of returns) and_iMis the correlation of return of stock i with the market. So the risk increases as _iand _iMincreases.