This problem illustrates how beta coefficients are estimated. It may be answered using any program that performs linear regression analysis such as Excel. The following information is given:

				Return on
Period		Market		Stock X		Stock Y
1		11%		-3%		18%
2		23		13		33
3		-3		1		2
4		-10		-8		-1
5		2		5		9
6		14		8		19
7		-5		1		-9
8		24		11		11
9		7		-4		20
10		-8		9		-14

Using regression analysis, compute the estimated equations relating the return on stock X to the return on the market and the return on stock Y to the return on the market. Round your answers to three decimal places.

Return Stock X = + Market Return

Return Stock Y = + Market Return

According to the equations, what is each stock's beta coefficient? Round your answers to three decimal places.

Stock X
Stock Y

What does each beta coefficient imply about the systematic risk associated with each stock?

Stock X has the -Select-lowerhigherItem 7 beta; it has -Select-lessgreaterItem 8 systematic risk.

What is the difference between the return on each stock given by the estimated equation for period 10 and the actual return? Round your answers to three decimal places.

Stock X
Stock Y

What is the R2 for each equation? Round your answers to two decimal places.

Stock X
Stock Y
PLEASE SHOW WORK